UC-NRLF 


37    712 


o 


NEW  BANKING  SYSTEM : 


THE 


NEEDFUL  CAPITAL  FOR  REBUILDING 
THE  BURNT  DISTRICT. 


BY    LYSANDER  /SPOONER. 


BOSTON: 

SOLD     BY     A.     WILLIAMS     &     CO 

135     WASHINGTON     STREET. 

1873. 


NEW  BANKING  SYSTEM: 


THE 


NEEDFUL  CAPITAL  FOR  REBUILDING 
THE  BURNT  DISTRICT. 


BY    LYSANDER.SPOONER. 


B  0  S  T  0  N  : 
SOLD     BY     A.     WILLIAMS     &     CO. 

135     WASHINGTON     STREET. 

1873. 


Entered  according  to  Act  of  Congress,  in  the  year  1873, 

BY  LYSANDER  SPOONER, 
in  the  office  of  the  Librarian  of  Congress,  at  Washington. 


Printed  by 

WARREN  RICHARDSON, 
112  Washington  St 


GIFT 


CONTENTS. 


S77 


PAGE 


CHAPTER  I. — A  New  Banking  System,  5 

CHAPTER  II. — Specie  Payments,  12 

CHAPTER  III. — No  Inflation  of  Prices,  21 

CHAPTER  IV. — Security  of  the  System,  35 

CHAPTER  V. — The  System  as  a  Credit  System,  41 

CHAPTER  VI. — Amount  of  Currency  Needed,  48 
CHAPTER  VII. — Importance  of  the  System  to 

Massachusetts,  59 
CHAPTER  VIII.— The  True  Character  of  the 

"  National"  System,  70 
CHAPTER  IX. — Amasa  Walker's  Opinion  of 

the  Author's  System,  75 


The  reader  will  understand  that  the  ideas  pre- 
sented in  the  following  pages  admit  of  a  much  more 
thorough  demonstration  than  can  be  given  in  so 
small  a  space.  Such  demonstration,  if  it  should 
be  necessary,  the  author  hopes  to  give  at  a  future 
time. 

Boston,  March,  1873. 


CHAPTER  I. 

A     NEW    BANKING     SYSTEM. 

Under  the  banking  system — an  outline  of  which  is 
hereafter  given —  the  real  estate  of  Boston  alone  — 
taken  at  only  three-fourths  its  value,  as  estimated  by 
the  State  valuation*1  —  is  capable  of  furnishing  three 
hundred  millions  of  dollars  of  loanable  capital. 

Under  the  same  system,  the  real  estate  of  Mass- 
achusetts —  taken  at  only  three-fourths  its  estimated 
valuef — is  capable  of  furnishing  seven  hundred  and 
fifty  millions  of  loanable  capital. 

The  real  estate  of  the  Commonwealth,  therefore,  is 
capable  of  furnishing  an  amount  of  loanable  capital 
more  than  twelve  times  as  great  as  that  of  all  the 
"National"  Banks  in  the  StateJ;  more  than  twice  as 
great  as  that  of  all  the  "National"  banks  of  the  whole 
United  States  ($353,917,470)  ;  and  equal  to  the  entire 
amount  ($750,000,000,  or  thereabouts)  both  of  green- 
back and  "National"  bank  currency  of  the  United 
States. 

*By  the  State  valuation  of  May,  1871,  the  real  estate  of  Boston  is  estimated 
at  $395,214,950. 

t  By  the  State  valuation  of  May,  1871,  the  real  estate  of  the  Commonwealth 
is  estimated  at  $991,196,803. 

\  The  amount  of  circulation  now  authorized  by  the  present  "  National  "  banks 
of  Massachusetts,  is  $58,506,686,  as  appears  by  the  recent  report  of  the  Comp- 
troller of  the  Currency. 


G 


It  is  capable  of  furnishing  loanable  capital  equal  to 
one  thousand  dollars  for  every  male  and  female  person, 
of  sixteen  years  of  age  and  upwards,  within  the  Com- 
monwealth ;  or  two  thousand  five  hundred  dollars  for 
every  male  adult. 

It  would  scarcely  be  extravagant  to  say  that  it  is 
capable  of  furnishing  ample  capital  for  every  deserving 
enterprise,  and  every  deserving  man  and  woman,  within 
the  State ;  and  also  for  all  such  other  enterprises  in 
other  parts  of  the  United  States,  and  in  foreign  com- 
merce, as  Massachusetts  men  might  desire  to  engage  in. 

Unless  the  same  system,  or  some  equivalent  one, 
should  be  adopted  in  other  States,  the  capital  thus 
furnished  in  this  State,  could  be  loaned  at  high  inter- 
est at  the  West  and  the  South. 

If  adopted  here  earlier  than  in  other  States,  it  would 
enable  the  citizens  of  this  State  to  act  as  pioneers  in 
the  most  lucrative  enterprises  that  are  to  be  found  in 
other  parts  of  the  country. 

All  this  capital  is  now  lying  dead,  so  far  as  being 
loaned  is  concerned. 

All  this  capital  can  be  loaned  in  the  form  of  cur- 
rency, if  so  much  can  be  used. 

All  the  profits  of  banking,  under  this  system,  would 
be  clear  profits,  inasmuch  as  the  use  of  the  real  estate 
as  banking  capital,  would  not  interfere  at  all  with  its 
use  for  other  purposes. 

The  use  of  this  real  estate  as  banking  capital  would 
break  up  all  monopolies  in  banking,  and  in  all  other 
business  depending  upon  bank  loans.  It  would  diffuse 
credit  much  more  widely  than  it  has  ever  been  diffused. 
It  would  reduce  interest  to  the  lowest  rates  to  which 


free  competition  could  reduce  it.  It  would  give  im- 
mense activity  and  power  to  industrial  and  commer- 
cial enterprise.  It  would  multiply  machinery,  and  do 
far  more  to  increase  production  than  any  other  system 
of  credit  and  currency  that  has  ever  been  invented. 
And  being  furnished  at  low  rates  of  interest,  would 
secure  to  producers  a  much  larger  share  of  the  pro- 
ceeds of  their  labor,  than  they  now  receive. 

All  this  capital  can  be  brought  into  use  as  fast  as 
the  titles  to  real  estate  can  be  ascertained,  and  the 
necessary  papers  be  printed. 

Legally,  the  system  (as  the  author  claims,  arid-  is 
prepared  to  establish)  stands  upon  the  same  principle 
as  a  patented  machine ;  and  is,  therefore,  already  legal- 
ized by  Congress ;  and  cannot,  unless  by  a  breach  of 
the  public  faith,  any  more  be  prohibited,  or  taxed, 
either  by  Congress  or  this  State,  than  can  the  use  of  a 
patented  machine. 

Every  dollar  of  the  currency  furnished  by  this  sys- 
tem would  have  the  same  value  in  the  market  as  a 
dollar  of  gold ;  or  so  nearly  the  same  value  that  the 
difference  would  be  a  matter  of  no  appreciable  impor- 
tance. 

The  system  would,  therefore,  restore  specie  payments 
at  once,  by  furnishing  a  great  amount  of  currency, 
that  would  be  equal  in  value  to  specie. 

The  system  would  not  inflate  prices  above  their  true 
and  natural  value,  relatively  to  specie ;  for  no  possible 
amount  of  paper  currency,  every  dollar  of  which  is 
equal  in  value  to  specie,  can  inflate  prices  above  their 
true  and  natural  value,  relatively  to  specie. 


8 


Whenever,  if  ever,  the  paper  should  not  buy  as  much 
in  the  market  as  specie,  it  would  be  returned  to  the 
banks  for  redemption,  and  thus  taken  out  of  circula- 
tion. So  that  no  more  could  be  kept  in  circulation 
than  should  be  necessary  for  the  purchase  and  sale  of 
property  at  specie  prices. 

The  system  would  not  tend  to  drive  specie  out  of 
the  country ;  although  very  little  of  it  w^ould  be  needed 
by  the  banks.  It  would  rather  tend  to  bring  specie 
into  the  country,  because  it  would  immensely  increase 
our  production.  We  should,  therefore,  have  much 
more  to  sell,  and  much  less  to  buy.  This  would  always 
give  a  balance  in  our  favor,  which  would  have  to  be 
paid  in  specie. 

It  is,  however,  a  matter  of  no  practical  importance 
whether  the  system  would  bring  specie  into  the  coun- 
try, or  drive  it  out ;  for  the  volume  and  value  of  the 
currency  would  be  substantially  unaffected  either  by 
the  influx  or  efflux  of  specie.  Consequently  industry, 
trade,  and  prices  would  be  undisturbed  either  by  the 
presence  or  absence  of  specie.  The  currency  would 
represent  property  that  could  not  be  exported ;  that 
would  always  be  here ;  that  would  always  have  a  value 
as  fixed  and  well  known  as  that  of  specie ;  that  would 
always  be  many  times  more  abundant  than  specie  can 
ever  be ;  and  that  could  always  be  delivered  (in  the 
absence  of  specie)  in  redemption  of  the  currency. 
These  attributes  of  the  currency  would  render  all 
financial  contractions,  revulsions,  and  disorders  forever 
impossible. 

The  following  is 


AN   OUTLINE   OF   THE   SYSTEM. 

The  principle  of  the  system  is  that  the  currency 
shall  represent  an  invested  dollar,  instead  of  a  specie 
dollar. 

The  currency  will,  therefore,  be  redeemable  by  an 
invested  dollar,  except  when  redeemed  by  specie,  or  by 
being  received  in  payment  of  debts  due  the  banks. 

The  best  capital  will  probably  be  mortgages  and  rail- 
roads ;  and  these  will  very  likely  be  the  only  capital 
which  it  will  ever  be  expedient  to  use. 

Inasmuch  as  railroads  could  not  be  used  as  capital, 
without  a  modification  of  their  present  charters,  mort- 
gages are  probably  the  best  capital  that  is  immediately 
available. 

Supposing  mortgages  to  be  the  capital,  they  will  be 
put  into  joint  stock,  held  by  trustees,  and  divided  into 
shares  of  one  hundred  dollars  each. 

This  stock  may  be  called  the  PRODUCTIVE  STOCK,  and 
will  be  entitled  to  the  dividends. 

The  dividends  will  consist  of  the  interest  on  the 
mortgages,  and  the  profits  of  banking. 

The  interest  on  the  mortgages  should  be  so  high  — 
say  six  or  seven  per  cent — as  to  make  the  PRODUCTIVE 
STOCK  worth  ordinarily  par  of  specie  in  the  market, 
independently  of  the  profits  of  banking. 

Another  kind  of  stock,  which  may  be  called  Circu- 
lating Stocky  will  be  created,  precisely  equal  in  amount 
to  the  PRODUCTIVE  STOCK,  and  divided  into  shares  of  one 
dollar  each. 

This  Circulating  Stock  will  be  represented  by  cer- 
tificates, scrip,  or  bills,  of  various  denominations,  like 


10 


our  present  bank  bills  —  that  is,  representing  one,  two, 
three,  Jive,  ten,  or  more  shares,  of  one  dollar  each. 

These  certificates,  scrip,  or  bills  of  the  Circulating 
Stock,  will  be  issued  for  circulation  as  currency,  as  our 
bank  bills  are  now. 

In  law,  this  Circulating  Stock  will  be  in  the  nature 
of  a  lien  on  the  PRODUCTIVE  STOCK.  It  will  be  entitled 
to  no  dividends.  Its  value  will  consist,  first,  in  its 
title  to  be  received  in  payment  of  all  dues  to  the  bank ; 
second,  in  its  title  to  be  redeemed,  either  in  specie  on 
demand,  or  in  specie,  with  interest  from  the  time  of 
demand,  before  any  dividends  can  be  made  to  the 
bankers ;  and,  third,  in  its  title,  when  not  redeemed 
with  specie;  to  be  redeemed  (in  sums  of  one  hundred 
dollars  each)  by  a  transfer  of  a  corresponding  amount 
of  the  capital  itself;  that  is,  of  the  PRODUCTIVE  STOCK. 

The  holders  of  the  Circulating  Stock  are,  therefore, 
sure,  first,  to  be  able  to  use  it  (if  they  have  occasion 
to  do  so)  in  payment  of  their  dues  to  the  bank;  second, 
to  get,  in  exchange  for  it,  either  specie  on  demand,  or 
specie,  with  interest  from  the  time  of  demand;  or, 
third,  a  share  of  the  capital  itself,  the  PRODUCTIVE 
STOCK  ;  a  stock  worth  par  of  specie  in  the  market,  and 
as  merchantable  as  a  share  of  railroad  stock,  or  gov- 
ernment stock,  or  any  other  stock  whatever  is  now. 

Whenever  PRODUCTIVE  STOCK  shall  have  been  trans- 
ferred in  redemption  of  Circulating  Stock,  it  (the 
PRODUCTIVE  STOCK)  may  be  itself  redeemed,  or  bought 
back,  at  pleasure,  by  the  bankers,  on  their  paying  its 
face  in  specie,  with  interest  (or  dividends)  from  the  time 
of  the  transfer;  and  must  be  so  bought  back,  before 
any  dividends  can  be  paid  to  the  original  bankers. 


11 


The  fulfilment  of  all  these  obligations,  on  the  part 
of  the  hank,  is  secured  by  the  fact  that  the  capital  and 
all  the  resources  of  the  bank  are  in  the  hands  of  trus- 
tees, who  are  legally  bound  —  before  making  any 
dividends  to  the  bankers  —  to  redeem  all  paper  in  the 
manner  mentioned ;  and  also  to  buy  back  all  PRODUC- 
TIVE STOCK  that  shall  have  been  transferred  in  redemp- 
tion of  the  circulation. 

Such  are  the  general  principles  of  the  system.  The 
details  are  too  numerous  to  be  given  here.  They  will 
be  found  in  the  "  Articles  of  Association  of  a  Mort- 
gage Stock  Banking  Company"  which  the  author  has 
drawn  up  and  copyrighted. 


CHAPTER    II. 

SPECIE     PAYMENTS. 

Although  the  banks,  under  this  system,  make  no 
absolute  promise  to  pay  specie  on  demand,  the  system 
nevertheless  affords  a  much  better  practical  guaranty 
for  specie  payments,  than  the  old  specie  paying  system 
(so  called);  and  for  these  reasons,  viz  : 

1.  The  banks  would  be  so  universally  solvent,  and 
so  universally  known  to  be  solvent,  that  no  runs  would 
ever  be  made  upon  them  for  specie,  through  fear  of 
their  insolvency.    They  could,  therefore,  maintain  spe- 
cie payments  with  much  less  amounts  of  specie,  than 
the  old  specie  paying  banks  (so  called)  could  do. 

2.  As  there  would  be  no  fears  of  the  insolvency  of 
the  banks,  and  as  the  paper  would  be  more  convenient 
than  specie  for  purposes  of  trade,  bills  would  rarely  be 
presented  for  redemption  —  otherwise  than  in  payment 
of  debts  due  the  banks  —  except  in  those  cases  where 
the  holders  desired  to  invest  their  money ;  and  would 
therefore  prefer  a  transfer  of  PRODUCTIVE  STOCK,  to  a 
payment  in  specie.     If  they  wanted  specie  for  expor- 
tation, they  would  buy  it  in  the    market  (with  the 
bills),  as   they  would  any  other  commodities  for  ex- 
port.*    It  would,  therefore,  usually  be  only  when  they 
wanted  an  investment,  and  could  find  none  so  good  as 

*  There  would  always  be  a  plenty  of  specie  for  sale,  in  the  seaports,  as  mer- 
chandise. 


13 


the  PRODUCTIVE  STOCK,  that  they  would  return  their 
bills  for  redemption.  And  then  they  would  return 
them,  not  really  for  the  purpose  of  having  them 
redeemed  with  specie,  but  in  the  hope  of  getting  a 
transfer  of  PRODUCTIVE  STOCK,  and  holding  it  awhile, 
and  drawing  interest  on  it. 

3.  The  banks  would  probably  find  it  for  their  inter- 
est, as  promoting  the  circulation  of  their  bills,  to  pay, 
at  all  times,    such   small  amounts  of  specie,  as  the 
public  convenience  might  require. 

4.  If  there   should  be  any  suspensions  of  specie 
payments,  they  would  be  only  temporary   ones,  by 
here  and  there  a  bank  separately,  and  not  by  all  the 
banks  simultaneously,   as  under  the  so  called  specie 
paying    system.      No    general    public   inconvenience 
would  therefore  ever  be  felt  from  that  cause. 

5.  If  the  banks  should  rarely,  or  never,  pay  specie 
on  demand,  that  fact  would  bring  no  discredit  upon 
their  bills,  and  be  no  obstacle  to  their  circulation  at 
par  with  specie.     It  would  be  known  that  —  unless 
bad  notes  had  been  discounted  —  all  the  bills  issued  by 
the  banks,  would  be  wanted  to  pay  the  debts  due  the 
banks.      This  would  ordinarily  be  sufficient,  of  itself, 
to  keep  the  bills  at  par  with  specie.     It  would  also  be 
known  that,   if  specie  were  not  paid  on  demand,  it 
would  either  be  paid  afterwards,  with  interest  from  the 
time  of  demand ;  or  PRODUCTIVE  STOCK,  equal  in  value 
to  specie  in  the  market,  would  be, transferred  in  re- 
demption  of    the  bills.     The   bills,   therefore,    would 
never  depreciate   in   consequence  of  specie  not  being 

2 


14 


paid  on  demand;  nor  would  any  contraction  of  the 
currency  ever  be  occasioned  on  that  account. 

For  the  reasons  now  given,  the  system  is  practically 
the  best  specie  paying  system  that  was  ever  invented. 
That  is  to  say,  it  would  require  less  specie  to  work  it ; 
and  also  less  to  keep  its  bills  always  at  par  with  specie. 
In  proportion  to  the  amount  of  currency  it  would  fur- 
nish, it  would  not  require  so  much  as  one  dollar  in  specie, 
where  the  so  called  specie  paying  system  would  require 
a  hundred.  It  would  also,  by  immensely  increasing 
our  production  and  exports,  do  far  more  than  any  other 
system,  towards  bringing  specie  into  the  country,  and 
preventing  its  exportation. 

If  it  should  be  charged  that  the  system  supplies  no 
specie  for  exportation ;  the  answer  is,  that  it  is  really 
no  part  of  the  legitimate  business  of  a  bank  to  furnish 
specie  for  exportation.  Its  legitimate  business  is  sim- 
ply to  furnish  credit  and  currency  for  home  industry 
and  trade.  And  it  can  never  furnish  these  constantly, 
and  in  adequate  amounts,  unless  it  can  be  freed  from 
the  obligation  to  supply  specie  on  demand  for  exporta- 
tion. Specie  should,  therefore,  always  be  merely  an 
article  of  merchandise  in  the  market,  like  any  other ; 
and  should  have  no  special  —  or,  at  least,  no  important 
—  connection  with  the  business  of  banking,  except  as 
furnishing  the  measure  of  value.  If  a  paper  currency 
is  made  payable  in  specie,  on  demand,  very  little  of  it 
can  ever  be  issued,  or  kept  in  circulation;  and  that 
little  will  be  so  irregular  and  inconstant  in  amount  as 
to  cause  continual  and  irremediable  derangements. 


But  if  a  paper  currency,  instead  of  promising  to  pay 
specie  on  demand,  promises  only  an  alternative  re- 
demption, viz  :  specie  on  demand,  or  specie  with  inter- 
est from  the  time  of  demand,  or  other  merchantable 
property  of  equal  market  value  with  specie  —  it  can 
then  be  issued  to  an  amount  equal  to  such  property ; 
and  yet  keep  its  promises  to  the  letter.  It  can,  there- 
fore, furnish  all  the  credit  and  currency  that  can  be 
needed;  or  at  least  many  times  more  than  the  so  called 
specie  paying  system  ever  did,  or  ever  can,  furnish.  And 
then  the  interest,  industry  and  trade  of  a  nation  will 
never  be  disturbed  by  the  exportation  of  specie.  And 
yet  the  standard  of  value  will  always  be  maintained. 

The  difference  between  the  system  here  proposed, 
and  the  so  called  specie  paying  system  —  in  respect  to 
their  respective  capacities  for  furnishing  credit  and  cur- 
rency, and  at  the  same  time  fulfilling  their  contracts  to 
the  letter  —  is  as  fifty  to  one,  at  the  least,  in  favor  of 
the  former  ;  probably  much  more  than  that. 

Thus  under  the  system  now  proposed,  the  real  estate 
and  railroads  of  the  United  States,  at  their  present  val- 
ues, are  capable  of  furnishing  twenty  thousand  millions 
($20,000,000,000)  of  paper  currency;  and  furnishing 
it  constantly,  and  without  fluctuation,  and  every  dollar 
of  it  will  have  an  equal  market  value  with  gold.  The 
contracts  or  certificates  comprising  it,  can  always  be 
fulfilled  to  the  letter ;  that  is,  the  capital  itself,  (the 
PRODUCTIVE  STOCK,)  represented  by  these  certificates, 
can  always  be  delivered,  on  demand,  in  redemption  of 
the  certificates,  if  the  banks  should  be  unable  to  redeem 
in  specie. 


16 


On  the  other  hand,  it  would  be  impossible  to  have  so 
much  as  four  hundred  millions,  ($400,000,000)  —  one 
fiftieth  of  the  amount  before  mentioned  —  of  so  called 
specie  paying  paper  currency ;  that  is,  a  paper  promis- 
ing to  pay  specie  on  demand ;  and  constantly  able  to 
fulfil  its  obligations. 

It  is  of  no  appreciable  importance  that  a  paper  cur- 
rency should  be  payable  on  demand  with  specie.  It  is 
sufficient,  if  it  be  payable  according  to  its  terms,  if  only 
those  terms  are  convenient  and  acceptable.  For  then 
the  value  of  the  currency  will  be  known,  and  its  con- 
tracts will  be  fulfilled  to  the  letter.  And  when  these  con- 
tracts are  fulfilled  to  the  letter,  then,  to  all  practical 
purposes,  specie  payments  are  maintained.  When,  for 
example,  a  man  promises  to  pay  wheat,  either  on  de- 
mand, or  at  a  time  specified,  and  he  fulfils  that  con- 
tract to  the  letter,  that,  to  all  practical  purposes,  is 
specie  payments  ;  as  much  so  as  if  the  promise  and  pay- 
ment had  been  made  in  coin.  IT  is,  THEREFORE,  THE 

SPECIFIC  AND  LITERAL  FULFILMENT  OF  CONTRACTS,  THAT 
CONSTITUTES  SPECIE  PAYMENTS  ;  AND  NOT  THE  PARTICULAR 
KIND  OF  PROPERTY  THAT  IS  PROMISED  AND  PAID. 

The  great  secret,  then,  of  having  an  abundant  paper 
currency,  and  yet  maintaining  all  the  while  specie 
payments,  consists  in  having  the  paper  represent  prop- 
erty— like  real  estate,  for  example  —  that  exists  in 
large  amounts,  and  can  always  be  delivered,  on  de- 
mand, in  redemption  of  the  paper ;  and  also  in  having 
this  paper  issued  by  the  persons  who  actually  own  the 
property  represented  by  it,  and  who  can  be  compelled 


17 


by  law  to  deliver  it  in  redemption  of  the  paper.  And 
the  great  secret  —  if  it  he  a  secret  —  of  having  only  a 
scanty  currency,  and  of  not  having  specie  payments, 
consists  in  having  the  paper  issued  by  a  government 
that  cannot  fulfil  its  contracts,  and  has  no  intention  of 
fulfilling  them  ;  and  by  banks  that  are  not  even  re- 
quired to  fulfil  them. 

It  is  somewhat  remarkable  that  after  ten  years  ex- 
periment, we  have  not  yet  learned  these  apparently 
self-evident  truths. 

The  palpable  fact  is  that  the  advocates  of  the  pres- 
ent "  National "  currency  system,  —  that  is,  the  stock- 
holders in  the  present  "  National  V  banks,  —  do  not 
wish  for  specie  payments.  They  wish  only  to  maintain, 
in  their  own  hands,  a  monopoly  of  banking,  and,  as  far 
as  possible  also,  a  monopoly  of  all  business  depending 
upon  bank  loans.  They  wish,  therefore,  to  keep  the 
volume  of  the  currency  down  to  its  present  amount. 
As  an  excuse  for  this,  they  profess  a  great  desire  for 
specie  payments ;  and  at  the  same  time  practice  the 
imposture  of  declaring  that  specie  payments  will  be 
impossible,  if  the  amount  of  the  currency  be  increased. 

But  all  this  is  sheer  falsehood  and  fraud.  It  is,  of 
course,  impossible  to  have  specie  payments,  so  long  as 
the  only  currency  issued  is  issued  by  a  government 
that  has  nothing  to  redeem  with,  and  has  no  intention 
of  redeeming ;  and  by  banks  that  are  not  even  required 
to  redeem.  But  there  is  no  obstacle  to  our  having 
twenty  times  as  much  currency  as  we  now  have,  and 
yet  having  specie  payments — or  the  literal  fulfilment 


18 


of  contracts  —  if  we  will  but  suffer  the  business  of 
banking  to  go  into  the  hands  of  those  who  have  prop- 
erty with  which  to  redeem,  and  can  be  compelled  by 
law  to  redeem. 

It  is  with  government  paper,  and  bank  paper,  as  it  is 
with  the  paper  of  private  persons  ;  that  is,  it  is  worth 
just  what  can  be  delivered  in  redemption  of  it,  and  no 
more.  We  all  understand  that  the  notes  of  the  Astors, 
and  Stewarts,  and  Vanderbilts,  though  issued  by  mil- 
lions, and  tens  of  millions,  are  really  worth  their  nom- 
inal values.  And  why  ?  Solely  because  the  makers  of 
them  have  the  property  with  which  to  redeem  them  in 
full,  and  can  be  made  to  redeem  them  in  full.  We  also 
all  understand  that  the  notes  of  Sam  Jones,  and  Jim 
Smith,  and  Bill  Nokes,  though  issued  for  only  five  dol- 
lars, are  not  worth  two  cents  on  the  dollar.  And  why  ? 
Solely  because  they  have  nothing  to  pay  with ;  and 
cannot  be  made  to  pay. 

Suppose,  now,  that  these  notes  of  Sam  Jones,  and 
Jim  Smith,  and  Bill  Nokes,  for  five  dollars,  were  the 
only  currency  allowed  by  law ;  and  that  they  were 
worth  in  the  market  but  two  cents  on  the  dollar.  And 
suppose  that  the  few  holders  of  these  notes,  wishing  to 
make  the  most  of  them,  at  the  expense  of  the  rights 
of  everybody  else,  should  keep  up  a  constant  howl  for 
specie  payments  ;  and  should  protest  against  any  issue 
of  the  notes  of  the  Astors,  the  Stewarts,  and  the  Van- 
derbilts, upon  the  ground  that  such  issue  would  inflate 
the  currency,  and  postpone  specie  payments !  What 
would  we  think  of  men  capable  of  uttering  such  ab- 


19 


surdities  ?  Would  we  in  charity  to  their  weakness,  call 
them  idiots  ?  or  would  we  in  justice  to  their  villainy, 
denounce  them  as  impostors  and  cheats  of  the  most 
transcendent  and  amazing  impudence  ?  And  what 
would  we  think  of  the  wits  of  forty  millions  of  people, 
W7ho  could  be  duped  by  such  preposterous  falsehoods  ? 

And  yet  this  is  scarcely  an  exaggerated  picture  of 
the  fraud  that  has  been  practiced  upon  the  people  for 
the  last  ten  years.  A  few  men  have  secured  to  them- 
selves the  monopoly  of  a  few  irredeemable  notes ;  and 
not  wishing  to  have  any  competition,  either  in  the 
business  of  banking,  or  in  any  business  depending 
upon  bank  loans,  they  cry  out  for  specie  payments ; 
and  declare  that  no  solvent  or  redeemable  notes  must 
be  put  into  circulation,  in  competition  with  their 
insolvent  and  irredeemable  ones,  lest  the  currency  be 
inflated,  and  specie  payments  be  postponed ! 

And  this  imposture  is  likely  to  be  palmed  off  upon 
the  people  in  the  future,  as  it  has  been  in  the  past,  if 
they  are  such  dunces  as  to  permit  it  to  be  done. 

It  is  perfectly  evident,  then,  that  specie  payments 
—  or  the  literal  fulfilment  of  contracts  —  does  not  de- 
pend at  all  upon  the  amount  of  paper  in  circulation  as 
currency ;  but  solely  upon  the  fact  whether,  on  the  one 
hand,  it  be  issued  by  those  who  have  property  with 
which  to  redeem  it,  and  can  be  made  to  redeem  it ;  or 
whether,  on  the  other  hand,  it  be  issued  by  those  who 
cannot  redeem  it,  and  cannot  be  made  to  redeem  it. 

When  the  people  shall  understand  these  simple,  man- 
ifest truths,  they  will  soon  put  an  end  to  the  monopoly, 


20 


extortion,  fraud,  and  tyranny  of  the   existing   "  Na- 
tional "  system. 

The  "National"  system,  so  called,  is,  in  reality,  no 
national  system  at  all ;  except  in  the  mere  facts  that  it 
is  called  the  national  system,  and  was  established  by 
the  national  government.  It  is,  in  truth,  only  a  pri- 
vate system ;  a  mere  privilege  conferred  upon  a  few,  to 
enable  them  to  control  prices,  property,  and  labor ;  and 
thus  to  swindle,  plunder,  and  oppress  all  the  rest  of  the 
people. 


CHAPTER    III. 

NO    INFLATION    OF    PRICES. 
SECTION  1. 

In  reality  there  is  no  such  thing  as  an  inflation  of 
prices,  relatively  to  gold.  There  is  such  a  thing  as  a 
depreciated  paper  currency.  That  is  to  say,  there  is 
such  a  thing  as  a  paper  currency,  that  is  called  by  the 
same  names  as  gold  — to  wit,  money,  dollars,  &c. — 
but  that  cannot  be  redeemed  in  full ;  and  therefore  has 
not  the  same  value  as  gold.  Such  a  currency  does  not 
circulate  at  its  nominal,  but  only  at  its  real,  value. 
And  when  such  a  currency  is  in  circulation,  and  prices 
are  measured  by  it,  instead  of  gold,  they  are  said  to 
be  inflated,  relatively  to  gold.  But,  in  reality,  the 
prices  of  property  are  not  thereby  inflated  at  all  rela- 
tively to  gold.  It  is  only  the  measuring  of  prices  by  a 
currency,  that  is  called  by  the  same  names  as  gold,  but 
that  is  really  inferior  in  value  to  gold,  that  causes  the 
apparent,  not  real,  inflation  of  prices,  relatively  to 
gold. 

To  measure  prices  by  a  currency  that  is  called  by 
the  same  names  as  gold,  but  that  is  really  inferior  in 
value  to  gold,  and  then  —  because  those  prices  are 
nominally  higher  than  gold  prices  —  to  say  that  they 
are  inflated,  relatively  to  gold,  is  a  perfect  absurdity, 
3 


22 


If  we  were  to  call  a  foot  measure  a  yard,  and  were 
then  to  say  that  all  cloth  measured  by  it  became  there- 
by stretched  to  three  times  its  length,  relatively  to  a 
true  yard-stick,  we  should  simply  make  ourselves  ridic- 
ulous. We  should  not  thereby  prove  that  the  foot 
measure  had  really  stretched  the  cloth,  but  only  that  it 
had  taxed  our  brains  beyond  their  capacity. 

It  is  only  irredeemable  paper  —  irredeemable  in 
whole  or  in  part,  —  that  ever  appears  to  inflate  prices, 
relatively  to  gold.  But  that  it  really  causes  no  infla- 
tion of  prices,  relatively  to  gold,  is  proved  by  the  fact 
that  it  no  more  inflates  the  prices  of  other  property, 
than  it  does  the  price  of  gold  itself.  Thus  we  say  that 
irredeemable  paper,  that  is  worth  but  fifty  cents. on  the 
dollar,  inflates  the  prices  of  commodities  in  general  to 
twice  their  real  value.  By  this  we  mean,  that  they  are 
inflated  to  twice  their  value  relatively  to  gold.  And 
why  do  we  say  this  ?  Solely  because  it  takes  twice  as 
many  of  these  irredeemable  paper  dollars  to  buy  any 
commodity,  —  a  barrel  of  flour  for  example,  —  as  it 
would  if  the  paper  were  equal  in  value  to  gold.  But  it 
also  takes  twice  as  many  of  these  irredeemable  paper 
dollars  to  buy  gold  itself,  as  it  would  if  the  paper  were 
equal  in  value  to  gold.  There  is,  therefore,  just  as 
much  reason  for  saying  that  the  paper  inflates  the 
price  of  gold,  as  there  is  for  saying  that  it  inflates  the 
price  of  flour.  It  inflates  neither.  It  is,  itself,  worth 
but  fifty  cents  on  the  dollar ;  and  it,  therefore,  takes 
twice  as  much  of  it  to  buy  either  flour  or  gold,  as  it 
would  if  the  paper  were  of  equal  value  with  gold. 


23 


The  value  of  the  coins  —  in  any  nation  that  is  open 
to  free  commerce  with  the  rest  of  the  world — is  fixed 
by  their  value  in  the  markets  of  the  world ;  and  can 
neither  be  reduced  below  that  value,  in  that  nation,  by 
any  possible  amount  of  paper  currency,  nor  raised 
above  that  value,  by  the  entire  disuse  of  a  paper  cur- 
rency. Any  increase  of  the  currency,  therefore,  by 
means  of  paper  representing  other  property  than  the 
coins  —  but  having  an  equal  value  with  the  coins  —  is 
an  absolute  bona  fide  increase  of  the  currency  to  that 
extent ;  and  not  a  mere  depreciation  of  it,  as  so  many 
are  in  the  habit  of  asserting. 

Practically  and  commercially  speaking,  a  dollar  is 
not  necessarily  a  specific  thing,  made  of  silver,  or  gold, 
or  any  other  single  metal,  or  substance.  It  is  only 
such  a  quantum  of  market  value  as  exists  in  a  given 
piece  of  silver  or  gold.  And  it  is  the  same  quantum 
of  value,  whether  it  exist  in  gold,  silver,  houses,  lands, 
cattle,  horses,  wool,  cotton,  wheat,  iron,  coal,  or  any 
other  commodity  that  men  desire  for  use,  and  buy  and 
sell  in  the  market. 

Every  dollar's  worth  of  vendible  property  in  the 
world  is  equal  in  value  to  a  dollar  in  gold.  And  if  it 
were  possible  that  every  dollar's  worth  of  such  prop- 
erty, in  the  world,  could  be  represented,  in  the  market, 
by  a  contract  on  paper,  promising  to  deliver  it  on  de- 
mand;  and  if  every  dollar's  worth  could  be  delivered 
on  demand,  in  redemption  of  the  paper  that  represented 
it,  the  world  could  then  have  an  amount  of  currency 
equal  to  the  entire  property  of  the  world.  And  yet 
clearly  every  dollar  of  paper  would  be  equal  in  value 


24 


to  a  dollar  of  gold;  specie  payments  —  or  the  literal 
fulfilment  of  contracts  —  could  forever  be  maintained; 
and  yet  there  could  be  no  inflation  of  prices,  relatively 
to  gold.  Such  a  currency  would  no  more  inflate  the 
price  of  one  thing,  than  of  another.  It  would  as  much 
inflate  the  price  of  gold,  as  of  any  thing  else.  Gold 
would  stand  at  its  true  and  natural  value  as  a  metal ; 
arid  all  other  things  would  also  stand  at  their  true  and 
natural  values,  for  their  respective  uses. 

On  this  principle,  if  every  dollar's  worth  of  vendible 
property  in  the  United  States  could  be  represented  by 
a  paper  currency ;  and  if  the  property  could  all  be  de- 
livered on  demand,  in  redemption  of  the  paper,  such  a 
currency  would  not  inflate  the  prices  of  property  at  all, 
relatively  to  gold.  Gold  would  still  stand  at  its  true 
and  natural  value  as  a  metal,  or  at  its  value  in  the 

£ 

markets  of  the  world.  And  all  the  property  repre- 
sented by  the  paper,  would  simply  be  measured  by  the 
gold,  and  would  stand  at  its  true  and  natural  value, 
relatively  to  the  gold. 

We  could  then  have  some  thirty  thousand  millions 
($30,000,000,)  of  paper  .currency,  —  taking  our  prop- 
erty at  its  present  valuation.  And  yet  every  dollar  of 
it  would  be  equal  to  a  dollar  of  gold  ;  and  there  could 
evidently  be  no  inflation  of  prices,  relatively  to  gold. 
No  more  of  the  currency  could  be  kept  in  circulation, 
than  should  be  necessary  or  convenient  for  the  pur- 
chase and  sale  of  property  at  specie  prices. 

It  is  probably  not  practicable  to  represent  the  entire 
property  of  the  country  by  such  contracts  on  paper  as 


25 


would  be  convenient  and  acceptable  as  a  currency. 
This  is  especially  true  of  the  personal  property  ; 
although  large  portions  even  of  this  are  being  con- 
stantly represented  by  such  contracts  as  bank  notes, 
private  promissory  notes,  checks,  drafts,  and  bills  of 
exchange  ;  all  of  which  are  in  the  nature  of  currency  ; 
that  is,  they  serve  for  the  time  as  a  substitute  for  spe- 
cie ;  although  some  of  them  do  not  acquire  any  exten- 
sive, or  even  general,  circulation. 

But  that  it  is  perfectly  practicable  to  represent 
nearly  all  the  real  estate  of  the  country  —  including 
the  railroads  —  by  such  contracts  on  paper  as  will  be 
perfectly  convenient  and  acceptable  as  a  currency ;  and 
that  every  dollar  of  it  can  be  kept  always  at  par  with 
specie  throughout  the  entire  country  —  that  all  this  is 
perfectly  practicable,  the  author  offers  the  system 
already  presented  in  proof. 

SECTION  2. 

To  sustain  their  theory,  that  an  abundant  paper 
currency  —  though  equal  in  value  to  gold  —  inflates 
prices,  relatively  to  gold,  its  advocates  assert  that,  for 
the  time  being,  the  paper  depreciates  the  gold  itself 
below  its  true  value ;  or  at  least  below  that  value 
which  it  had  before  the  paper  was  introduced.  But 
this  is  an  impossibility ;  for  in  a  country  open  to  free 
commerce  with  the  rest  of  the  world,  gold  must  always 
have  the  same  value  that  it  has  in  the  markets  of  the 
world ;  neither  more,  nor  less.  No  possible  amount  of 


26 


paper  can  reduce  it  below  that  value ;  as  has  been 
abundantly  demonstrated  in  this  country  for  the  last 
ten  years.  Neither  can  any  possible  amount  of  paper 
currency  reduce  gold  below  its  only  true  and  natural 
value,  viz. :  its  value  as  a  metal,  for  uses  in  the  arts. 
The  paper  cannot  reduce  the  gold  below  this  value, 
because  the  paper  does  not  come  at  all  in  competition 
with  it  for  those  uses.  We  cannot  make  a  watch,  a 
spoon,  or  a  necklace,  out  of  the  paper ;  and  therefore 
the  paper  cannot  compete  with  the  gold  for  these  uses. 

That  gold  and  silver  now  have,  and  can  be  made  to 
have,  no  higher  value,  as  a  currency,  than  they  have 
as  metals  for  uses  in  the  arts,  is  proved  by  the  fact 
that  doubtless  not  more  than  one  tenth,  and  very  likely 
not  more  than  a  twentieth,  of  all  the  gold  and  silver  in 
the  world  (out  of  the  mines),  is  in  circulation  as  cur- 
rency. In  Asia,  where  these  metals  have  been  accu- 
mulating from,  time  immemorial,  and  whither  all  the 
gold  and  silver  of  Europe  and  America  —  except  what 
is  caught  up,  and  converted  into  plate,  jewelry,  &c.— 
is  now  going,  and  has  been  going  for  the  last  two 
thousand  years,  very  little  is  in  circulation  as  money. 
For  the  common  traffic  of  the  people,  coins  made  of 
coarser  metals,  shells,  and  other  things  of  little  value, 
are  the  only  currency.  It  is  only  for  the  larger  com- 
mercial transactions,  that  gold  and  silver  are  used  at 
all  as  a  currency.  The  great  bulk  of  these  metals  are 
used  for  plate,  jewelry,  for  embellishing  temples  and 
palaces.  Large  amounts  are  also  hoarded. 

But  that  gold  and  silver  coins  now  stand,   and  that 
they  can  be  made  to  stand,  as   currency,  only  at  their 


27 


true  and  natural  values  as  metals,  for  uses  in  the  arts  ; 
and  that  neither  the  use,  nor  disuse,  of  any  possible 
amount  of  paper  currency,  in  any  one  country  —  the 
United  States,  for  example  —  can  sensibly  affect  their 
values  in  that  country,  or  raise  them  above,  or  reduce 
them  below,  their  values  in  the  markets  of  the  world, 
the  author  hopes  to  demonstrate  more  fully  at  a  future 
time,  if  it  should  be  necessary  to  do  so. 

SECTION  3. 

Another  argument  —  or  rather  assertion  —  of  those 
who  say  that  any  increase  of  the  currency,  by  means 
of  paper — though  the  paper  be  equal  in  value  to 
gold  —  depreciates  the  value  of  the  gold,  or  inflates 
prices  relatively  to  gold,  is  this  :  They  assert  that, 
where  no  other  circumstances  intervene  to  affect  the 
prices  of  particular  commodities,  such  increase  of  the 
currency  raises  the  prices  of  all  kinds  of  property  — 
relatively  to  gold — in  a  degree  precisely  correspond- 
ing with  the  increase  of  the  currency. 

This  is  the  universal  assertion  of  those  who  oppose  a 
solvent  paper  currency;  or  a  paper  currency  that  is 
equal  in  value  to  gold. 

But  the  assertion  itself  is  wholly  untrue.  It  is 
wholly  untrue  that  an  abundant  paper  currency  —  that 
is  equal  in  value  to  gold  —  raises  the  prices  of  all  com- 
modities—  relatively  to  gold  —  in  a  proportion  corre- 
sponding to  the  increase  of  the  currency.  Instead  of 
doing  so,  it  causes  a  rise  only  in  agricultural  commodi- 
ties, and  real  estate;  while  it  causes  a  great  fall  in  the 
prices  of  manufactures  generally. 


-  28 


Thus  the  increased  currency  produces  a  directly 
opposite  effect  upon  the  prices  of  agricultural  commodi- 
ties and  real  estate,  on  the  one  hand,  and  upon  manu- 
factures, on  the  other. 

The  reasons  are  these : 

Agriculture  requires  but  very  few  exchanges,  and 
can,  therefore,  be  carried  on  with  very  little  money. 
Manufactures,  on  the  other  hand,  require  a  great  many 
exchanges,  and  can,  therefore,  be  carried  on  (except  in 
a  very  feeble  way),  only  by  the  aid  of  a  great  deal  of 
money. 

The  consequence  is,  that  the  people  of  all  those 
nations,  that  have  but  little  money,  are  engaged  mostly 
in  agriculture.  Very  few  of  them  are  manufacturers. 
Being  mostly  engaged  in  agriculture,  each  one  produ- 
cing the  same  commodities  with  nearly  all  the  others; 
and  each  one  producing  all  he  wants  for  his  own  con- 
sumption, there  is  no  market,  or  very  little  market,  for 
agricultural  commodities ;  and  such  commodities,  con- 
sequently, bear  only  a  very  small  price. 

Manufactured  commodities,  on  the  other  hand,  are 
very  scarce  and  dear,  for  the  sole  reason  that  so  few 
persons  are  engaged  in  producing  them. 

But  let  there  be  an  increase  of  currency,  and  labor- 
ers at  once  leave  agriculture,  and  become  manufac- 
turers. 

As  manufactured  commodities  usually  bring  much 
higher  prices  than  agricultural,  in  proportion  to  the 
labor  it  costs  to  produce  them,  men  usually  leave  agri- 
culture, and  go  into  manufacturing,  to  the  full  extent 
the  increased  currency  will  allow. 


29 


The  consequence  is  that,  under  an  abundant  cur- 
rency, manufactures  become  various,  abundant,  and 
cheap  ;  where  before  they  were  scarce  and  dear. 

But  while,  on  the  one  hand,  manufactures  are  thus 
becoming  various,  abundant,  and  cheap,  agricultural 
commodities,  on  the  other  hand,  are  rising :  and  why  ? 
Not  because  the  currency  is  depreciated,  but  simply 
because  so  many  persons,  who  before  —  under  a  scanty 
currency  —  were  engaged  in  agriculture,  and  produced 
all  the  agricultural  commodities  they  needed,  and  per- 
haps more  than  they  needed,  for  their  own  consump- 
tion, having  now  left  agriculture,  and  become  manufac- 
turers, have  become  purchasers  and  consumers,  instead 
of  producers,  of  agricultural  commodities. 

Here  the  same  cause  —  abundant  currency  —  that 
has  occasioned  a  rise  in  the  prices  of  agricultural  com- 
modities, has  produced  a  directly  opposite  effect  upon 
manufactures.  It  has  made  the  latter  various,  abun- 
dant, and  cheap ;  where  before  they  were  scarce  and 
dear. 

On  the  other  hand,  when  the  currency  contracts, 
manufacturing  industry  is  in  a  great  degree  stopped ; 
and  the  persons  engaged  in  it  are  driven  to  agriculture 
as  their  only  means  of  sustaining  life.  The  conse- 
quence is,  that  manufactured  commodities  become 
scarce  and  dear,  from  non-production.  At  the  same 
time,  agricultural  commodities  become  superabundant 
and  cheap,  from  over-production  and  want  of  a  market. 

Thus  an  abundant  currency,  and  a  scanty  currency, 
produce   directly  opposite    effects  upon  the  prices  of 
4 


30 


agricultural  commodities,  on  the  one  hand,  and  manu- 
factures, on  the  other. 

The  abundant  currency  makes  manufactures  various, 
ahundant,  and  cheap,  from  increased  production  ;  while 
it  raises  the  prices  of  agricultural  commodities,  by 
withdrawing  laborers  from  the  production  of  them,  and 
also  by  creating  a  body  of  purchasers  and  consumers, 
to  wit,  the  manufacturers. 

On  the  other  hand,  a  scanty  currency  drives  men 
from  manufactures  into  agriculture,  and  thus  causes 
manufactures  to  become  scarce  and  dear,  from  non-pro- 
duction; and,  at  the  same  time,  causes  agricultural 
commodities  to  fall  in  price,  from  over-production,  and 
want  of  a  market. 

But  whether,  on  the  one  hand,  agricultural  commodi- 
ties are  rising,  and  manufactured  commodities  are  fall- 
ing, under  an  abundant  currency ;  or  whether,  on  the 
other  hand,  manufactured  commodities  are  rising,  and 
agricultural  commodities  are  falling,  under  a  scanty 
currency,  the  value  of  the  currency  itself,  dollar  for 
dollar,  remains  the  same  in  both  cases. 

The  value  of  the  currency,  in  either  of  these  cases-, 
is  fixed,  not  at  all  by  the  amount  in  circulation,  but  by 
its  value  relatively  to  gold.  And  the  value  of  gold,  in 
any  particular  country,  is  fixed  by  its  value  as  a  metal, 
and  its  value  in  the  markets  of  the  world  ;  and  not  at 
all  by  any  greater  or  less  quantity  of  paper  that  may 
be  in  circulation  in  that  country. 


31 


SECTION  4. 

But  it  is  not  alone  agricultural  products  that  rise  in 
price  under  an  abundant  currency.  Real  estate  also, 
of  all  kinds  —  agricultural,  manufacturing,  and  com- 
mercial —  rises  under  an  abundant  currency,  and  falls 
under  a  scanty  currency.  The  reasons  are  these  : 

Agricultural  real  estate  rises  under  an  abundant  cur- 
rency, because  agricultural  products  rise  under  such  a 
currency,  as  already  explained.  Manufacturing  real 
estate  rises  under  an  abundant  currency,  simply  because 
-  money  being  the  great  instrumentality  of  manufac- 
turing industry  —  that  industry  is  active  and  profitable 
under  an  abundant  currency.  Commercial  real  estate 
rises  under  an  abundant  currency,  because,  under  such 
a  currency,  commerce,  the  exchange  and  distribution 
of  agricultural  and  manufactured  commodities,  is  active 
and  profitable.  Railroads,  also,  rise  under  an  abun- 
dant currency,  because,  under  such  a  currency,  the 
transportation  of  freight  and  passengers  is  increased. 

.On  the  other  hand,  all  kinds  of  real  estate  fall  in 
price  under  a  scanty  currency,  for  these  reasons,  to  wit: 
Agricultural  real  estate  falls,  because,  manufactures 
having  been  in  a  great  measure  stopped,  and  the  manu- 
facturers driven  into  agriculture,  there  is  little  market 
for  agricultural  products,  and  those  products  bring  only 
a  small  price.  Manufacturing  real  estate  falls,  because, 
manufacturing  industry  having  become  impossible  for 
lack  of  money,  manufacturing  real  estate  is  lying  dead, 
or  unproductive.  Commercial  real  estate  falls,  because 


32 


commerce,  the  exchange  and  distribution  of  agricultural 
and  manufactured  commodities,  has  ceased.  Railroads 
fall  in  price,  because,  owing  to  the  suspension  of  manu- 
factures and  commerce,  there  is  little  transportation  of 
either  freight  or  passengers. 

Thus  it  will  be  seen  that  an  abundant  currency 
creates  a  great  rise  in  agricultural  products,  and  in  all 
kinds  of  real  estate  —  agricultural,  manufacturing,  and 
commercial,  (including  railroads) ;  and,  at  the  same 
time,  causes  manufactured  commodities  to  become 
various,  abundant,  and  cheap.  While,  on  the  other 
hand,  a  scanty  currency  causes  agricultural  commodi- 
ties, and  all  kinds  of  real  estate,  to  fall  in  price ;  and, 
at  the  same  time,  makes  manufactured  commodities 
scarce  and  dear. 

It  is  a  particularly  noticeable  fact,  that  those  who 
claim  that  an  abundant  paper  currency  inflates  the 
prices  of  all  commodities,  relatively  to  gold,  never  find 
it  convenient  to  speak  of  the  variety,  abundance,  and 
cheapness  of  manufactures,  that  exist  under  an  abun- 
dant currency ;  but  only  of  the  high  prices  of  agricul- 
tural commodities,  and  real  estate. 

The  whole  subject  of  prices  —  a  subject  that  is  very 
little  understood,  and  that  has  been  forever  misrepre- 
sented, in  order  to  justify  restraints  upon  the  currency, 
and  keep  it  in  a  few  hands  —  deserves  a  more  exten- 
sive discussion ;  but  the  special  purposes  of  this  pam- 
phlet do  not  admit  of  it  here.  But  enough  has  proba- 
bly now  been  said,  to  show  that  the  great  changes  that 
take  place  in  prices,  under  an  abundant  currency,  on 


33 


the  one  hand,  and  a  scanty  currency,  on  the  other,  are 
not  occasioned  at  all  by  any  change  in  the  value  of  the 
currency  itself —  dollar  for  dollar  —  provided  the  cur- 
rency he  equal  in  value  to  coin. 

Enough,  also,  it  is  hoped,  has  heen  said,  to  show  to 
all  holders  of  either  agricultural,  manufacturing,  or 
commercial  real  estate  (including  railroads),  that  the 
greater  or  less  value  of  their  property  depends  almost 
wholly  upon  the  abundance  or  scarcity  of  currency ; 
and  that,  inasmuch  as,  under  the  system  proposed, 
they  have  the  power,  in  their  own  hands,  of  creating 
probably  all  the  currency  that  can  possibly  be  used  in 
manufactures  and  commerce,  they  have  no  one  but 
themselves  to  blame,  if  they  suffer  the  value  of  their 
property  to  be  destroyed  by  any  such  narrow  and 
tyrannical  systems  of  currency  and  credit  as  those  that 
now  prevail,  or  those  that  have  always  heretofore 
prevailed. 

By  using  their  real  estate  as  banking  capital,  they 
can  not  only  get  an  income  from  it,  in  the  shape  of 
interest  on  money,  but  by  supplying  capital  to  mechan- 
ics and  merchants,  they  create  a  large  class  who  will 
pay  high  prices  for  agricultural  products,  and  high 
prices  and  rents  for  manufacturing  and  commercial 
real  estate  ;  and  who  will  also  supply  them,  in  return, 
with  manufactured  commodities  of  the  greatest  variety, 
abundance,  and  cheapness. 

It  is,  therefore,  mere  suicide  for  the  holders  of  real 
estate,  who  have  the  power  of  supplying  an  indefinite 
amount  of  capital  for  mechanics  and  merchants  —  and 


34 


who  can  make  themselves  and  everybody  else  rich  by 
supplying  it  —  to  suffer  that  power  to  be  usurped  by 
any  such  small  body  of  men  as  those  who  now  monop- 
olize it,  through  mere  favoritism,  corruption,  and 
tyranny,  on  the  part  of  the  government,  and  not 
because  they  have  any  claim  to  it. 


CHAPTER    IV. 

SECURITY    OF    THE     SYSTEM. 

Supposing  the  property  mortgaged  to  be  ample,  the 
system,  as  a  system,  is  absolutely  secure.  The  cur- 
rency would  be  absolutely  incapable  of  insolvency  ; 
for  there  could  never  be  a  dollar  of  the  currency  in  cir- 
culation, without  a  dollar  of  capital  (Productive  Stock) 
in  bank,  which  must  be  transferred  in  redemption  of 
it,  unless  redemption  be  made  in  specie. 

The  capital  alone,  be  it  observed  —  independently  of 
the  notes  discounted  —  must  always  be  sufficient  to 
redeem  the  entire  circulation ;  for  the  circulation  can 
never  exceed  the  capital  (Productive  Stock).  But  the 
notes  discounted  are  also  holden  by  the  trustees,  and 
the  proceeds  of  them  must  be  applied  to  the  redemp- 
tion of  the  circulation.  Supposing,  therefore,  the  capi- 
tal to  be  sufficient,  and  the  notes  discounted  to  be 
solvent,  the  redemption  of  the  circulation  is  doubly 
secured. 

What  guarantee,  then,  have  the  public,  for  the  suffi- 
ciency of  the  mortgages  ?  They  have  these,  viz. : 

1.  The  mortgages,  composing  the  capital  of  a  bank, 
will  be  matters  of  public  record,  and  everybody,  in  the 
neighborhood,  will  have  the  means  of  judging  for  him- 
self of  the  sufficiency  of  the  property  holden.  If  the 


36 


property  should  be  insufficient,  the  bank  would  be  dis- 
credited at  once  ;  for  the  abundance  of  solvent  cur- 
rency would  be  so  great,  that  no  one  would  have 
any  inducement  to  take  that  which  was  insolvent  or 
doubtful. 

2.  By  the  Articles  of  Association,  all  the  mortgages 
that  make  up  the  capital  of  a  bank,  are  made  mutually 
responsible  for  each  other;  because,  if  any  one  mort- 
gage proves  insufficient,  no  dividend  can  afterwards  be 
paid  to  any  of  the  bankers  (mortgagors),  until   that 
deficiency  shall  have  been  made  good  by  the  company 
The  effect  of  this  provision  will  be,  to  make  all  the 
founders  of  a  bank  look  carefully  to  the  sufficiency  of 
each  other's  mortgages ;  because  no  man  will  be  will- 
ing to  put  in  a  good  mortgage  of  his  own,  on  equal 
terms  with  a  bad  mortgage  of  another  man's,  when  he 
knows  that  his  own  mortgage  will  have  to  contribute 
to   making    good   any  deficiency   of  the    other.     The 
result  will  be,  that  the  mortgages,  that  go  to  make  up 
the  capital  of  any  one  bank,  will  ~be  either  all  good,  or 
all   bad.     If  they  are  all  good,  the  solvency  of  the 
bank  will  be  apparent  to  all  in  the  vicinity ;  and  the 
credit  of  the  bank  will  at  once  be  established  at  home. 
If  the  mortgages  are  all  bad,  that  fact,  also,  will  be 
apparent  to  everybody  in  the  vicinity,  and  the  bank  is 
at  once  discredited  at  home. 

From  the  foregoing  considerations,  it  is  evident  that 
nothing  is  easier  than  for  a  good  bank  to  establish  its 
credit,  at  home  ;  and  that  nothing  is  more  certain  than 
that  a  bad  bank  would  be  discredited,  at  home,  from 
the  outset,  and  could  get  no  circulation  at  all. 


37 


It  is  also  evident  that  a  bank,  that  has  no  credit  at 
home,  could  get  none  abroad.  There  is,  therefore,  no 
danger  of  the  public  being  swindled  by  bad  banks. 

A  bank  that  is  well  founded,  and  that  has  estab- 
lished its  credit  at  home,  has  so  many  ways  of  estab- 
lishing its  credit  abroad,  that  there  is  no  need  that 
they  be  all  specified  here.  The  mode  that  seems  most 
likely  to  be  adopted,  is  the  following,  viz. : 

When  the  capital  shall  consist  of  mortgages,  it  will 
be  very  easy  for  all  the  banks,  in  any  one  State,  to 
make  their  solvency  known  to  each  other.  There 
would  be  so  many  banks,  that  some  system  would 
naturally  be  adopted  for  this  purpose. 

Perhaps  this  system  would  be,  that  a  standing  com- 
mittee, appointed  by  the  banks,  would  be  established 
in  each  State,  to  whom  each  bank  in  the  State  would 
be  required  to  produce  satisfactory  evidence  of  its  sol- 
vency, before  its  bills  should  be  received  by  the  other 
banks  of  the  State. 

When  the  banks,  or  any  considerable  number  of 
the  banks,  of  any  particular  State  —  Massachusetts, 
for  instance,  —  shall  have  made  themselves  so  far 
acquainted  with  each  other's  solvency,  as  to  be  ready 
to  receive  each  other's  bills,  t'hey  will  be  ready  to 
make  a  still  further  arrangement  for  their  mutual  bene- 
fit, viz :  To  unite  in  establishing  one  general  agency  in 
Boston,  another  in  New  York,  and  others  in  Philadel- 
phia, Baltimore,  Cincinnati,  Chicago,  St.  Louis,  New 
Orleans,  San  Francisco,  &c.,  &c.,  where  the  bills  of  all 
these  Massachusetts  banks  would  be  redeemed,  either 
5 


38 


from  a  common  fund  contributed  for  the  purpose,  or  in 
such  other  way  as  might  be  found  best.  And  thus  the 
bills  of  all  the  Massachusetts  banks  would  be  placed  at 
par  at  all  the  great  commercial  points. 

Each  bank,  belonging  to  the  association,  might  print 
on  the  back  of  its  bills,  "Redeemable  at  the  Massachu- 
setts Agencies  in  Boston,  New  York,  Philadelphia,  &c" 

In  this  way,  all  the  banks  of  each  State  might  unite 
to  establish  a  joint  agency  in  every  large  city,  through- 
out the  country,  for  the  redemption  of  all  their  bills. 
In  doing  so,  they  would  not  only  certify,  but  make 
themselves  responsible  for,  the  solvency  of  each  other's 
bills. 

The  banks  might  safely  make  permanent  arrange- 
ments of  this  kind  with  each  other ;  because  the  per- 
manent solvency  of  all  the  banks  might  be  relied  on. 

The  permanent  solvency  of  all  the  banks  might  be 
relied  on,  because,  under  this  system,  a  bank  (whose 
capital  consists  of  mortgages),  once  solvent,  is  neces- 
sarily forever  solvent,  unless  in  contingencies  so 
utterly  improbable  as  not  to  need  to  be  taken  into 
account.  In  fact,  in  the  ordinary  course  of  things, 
every  bank  would  be  growing  more  and  more  solvent ; 
because,  in  the  ordinary  course  of  things,  the  mort- 
gaged property  would  be  constantly  rising  in  value,  as 
the  wealth  and  population  of  the  country  should 
increase.  The  exceptions  to  this  rule  would  be  so  rare 
as  to  be  unworthy  of  notice. 

There  is,  therefore,  no  difficulty  in  putting  the  cur- 
rency, furnished  by  each  State,  at  par  throughout  the 
United  States. 


39 


At  the  general  agencies,  in  the  great  cities,  the 
redemption  would,  doubtless,  so  far  as  necessary,  be 
made  in  specie,  on  demand ;  because,  at  such  points, 
especially  in  cities  on  the  sea-board,  there  would 
always  be  an  abundance  of  specie  in  the  market  as 
merchandise ;  and  it  would,  therefore,  be  both  for  the 
convenience  and  interest  of  the  banks  to  redeem  in 
specie,  on  demand,  rather  than  transfer  a  portion  of 
their  capital,  and  then  pay  interest  on  that  capital 
until  it  should  be  redeemed,  or  bought  back,  with 
specie. 

Often,  however,  and  very  likely  even  in  the  great 
majority  of  cases,  a  man  from  one  State  —  as  Califor- 
nia, for  example,  —  presenting  Massachusetts  bills  for 
redemption  at  a  Massachusetts  agency  —  either  in 
Boston,  New  York,  or  elsewhere  —  would  prefer  to 
have  them  redeemed  with  bills  from  his  own  State, 
California,  rather  than  with  specie. 

If  the  system  were  adopted  throughout  the  United 
States,  the  banks  of  each  State  would  be  likely  to 
have  agencies  of  this  kind  in  all  the  great  cities.  Each 
of  these  agencies  would  exchange  the  bills  of  every 
other  State  for  the  bills  of  its  own  State ;  and  thus  the 
bills  of  each  State  would  find  their  way  home,  without 
any  demand  for  their  redemption  in  specie  having  ever 
been  made. 

Where  railroads  were  used  as  capital,  all  the  banks 
in  the  United  States  could  form  one  association,  of  the 
kind  just  mentioned,  to  establish  agencies  at  all  the 
great  commercial  points,  for  the  redemption  of  their 
bills. 


40 


Of  course  each  railroad  would  receive  the  bills  of  all 
other  roads,  for  fare  and  freight. 

Thus  all  railroad  currency,  under  this  system,  would 
be  put  at  par  throughout  the  United  States. 


CHAPTER*  V. 

THE     SYSTEM    AS     A     CREDIT     SYSTEM. 

SECTION  1. 

Perhaps  the  merits  of  the  system,  as  a  credit  sys- 
tem, 'cannot  be  better  illustrated  than  by  comparing 
the  amount  of  loanable  capital  it  is  capable  of  supply- 
ing, with  the  amount  which  the  present  "  National " 
banks  (so  called)  are  capable  of  supplying. 

If  we  thus  compare  the  two  systems,  we  shall  find 
that  the  former  is  capable  of  supplying  more  than  fifty 
times  as  much  credit  as  the  latter.  - 

Thus  the  entire  circulation  authorized  by  all  the 
"  National "  banks,*  is  but  three  hundred  and  fifty-four 
millions  of  dollars  ($354,000,000). 

But  the  real  estate  and  railroads  of  the  country  are 
probably  worth  twenty  thousand  millions  of  dollars 
($20,000,000,000).  This  latter  sum  is  fifty-six  times 
greater  than  the  former;  and  is  all  capable  of  being 
loaned  in  the  form  of  currency. 

Calling  the  population  of  the  country  forty  millions 
(40,000,000),  the  <•  National"  system  is  capable  of 
supplying  not  quite  nine  dollars  ($9)  of  loanable  cap- 

*  Exclusive  of  the  so-called  "  gold  "  banks,  which  are  too  few  to  be  worthy  of 
notice. 


42 


ital  to  each  individual  of  the  whole  population.  The 
system  proposed  is  capable  of  supplying  five  hundred 
dollars  ($500)  of  loanable  capital  to  each  individual 
of  the  whole  population. 

Supposing  one  half  the  population  (male  and  female) 
to  be  sixteen  years  of  age  and  upwards,  and  to  be 
capable  of  producing  wealth,  and  to  need  capital  for 
their  industry,  the  "  National "  system  would  furnish 
not  quite  eighteen  dollars  ($18)  for  each  one  of  them, 
on  an  average.  The  other  system  is  capable  of  furnish- 
ing one  thousand  dollars  $1,000)  for  each  one  of  them, 


on  an  average. 


Supposing  the  adults  (both  male  and  female)  of  the 
country  to  be  sixteen  millions  (16,000,000),  the  "Na- 
tional" system  is  capable  of  furnishing  only  twenty- 
two  dollars  and  twelve  and  a  half  cents  ($22.12^)  to 
each  one  of  these  persons,  on  an  average.  The  system 
proposed  is  capable  of  furnishing  twelve  hundred  and 
fifty  dollars  ($1,250)  to  each  one,  on  an  average. 

Supposing  the  number  of  male  adults  in  the  whole 
country  to  be  eight  millions  (8,000,000),  the  "  Na- 
tional "  system  is  capable  of  furnishing  only  forty-four 
dollars  and  twenty-five  cents  ($44.25)  to  each  one. 
The  other  system  is  capable  of  furnishing  twenty-five 
hundred  dollars  ($2,500)  to  each  one. 

The  present  number  of  "National"  banks  is  little 
less  than  two  thousand  (2,000).  Calling  the  number 
two  thousand  (2,000),  and  supposing  the  $354,000,000 
of  circulation  to  be  equally  divided  between  them,  each 
bank  would  be  authorized  to  issue  $177,000. 


43 


Under  the  proposed  system,  the  real  estate  and  rail- 
roads of  the  country  are  capable  of  furnishing  one  hun- 
dred thousand  (100,000)  banks,  having  each  a  capital 
of  two  hundred  thousand  dollars  ($200,000)  ;  or  it  is 
capable  of  furnishing  one  hundred  and  twelve  thousand 
nine  hundred  and  ninety-four  (112,994)  banks,  having 
each  a  capital  ($177,000),  equal,  on  an  average,  to  the 
capital  of  the  present  "  National "  banks.  That  is,  this 
system  is  capable  of  furnishing  fifty-six  times  as  many 
banks  as  the  "  National "  system,  having  each  the  same 
capital,  on  an  average,  as  the  "  National "  banks. 

Calling  the  number  of  the  present  "  National "  banks 
two  thousand  (2,000),  and  the  population  of  the  coun- 
try forty  millions  (40,000,000),  there  is  only  one  bank 
to  20,000  people,  on  an  average;  each  bank  being 
authorized  to  issue,  on  an  average,  a  circulation  of 
$177,000. 

Under  the  proposed  system,  we  could  have  one  bank 
for  every  five  hundred  (500)  persons;  each  bank  being 
authorized  to  issue  $200,000  ;  or  $23,000  each  more 
than  the  "  National "  banks. 

These  figures  give  some  idea  of  the  comparative 
capacity  of  the  two  systems  to  furnish  credit. 

Under  which  of  these  two  systems,  now,  would 
everybody,  who  needs  credit,  and  deserves  it,  be  most 
likely  to  get  it  ?  And  to  get  all  he  needs  to  make  his 
industry  most  productive  ?  And  to  get  it  at  the  lowest 
rates  of  interest  ? 

The  proposed  system  is  as  much  superior  to  the  old 
specie  paying  system  (so  called)  —  in  respect  to  the 


44 


amount  of  loanable  capital  it  is  capable  of  supplying— 
as  it  is  to  the  present  "  National "   system. 

SECTION  2. 

But  the  proposed  system  has  one  other  feature, 
which  is  likely  to  be  of  great  practical  importance,  and 
which  gives  it  a  still  further  superiority  —  as  a  credit 
system  —  over  the  so-called  specie  paying  system.  It 
is  this : 

The  old  specie  paying  system  (so  called)  could  add 
to  the  loanable  capital  of  the  country,  only  by  so  much 
currency  as  it  could  keep  in  circulation,  over  and  above 
the  amount  of  specie  that  it  was  necessary  to  keep  on 
hand/or  its  redemption.  But  the  amount  of  loanable 
capital  which  the  proposed  system  can  supply,  hardly 
depends  at  all  upon  the  amount  of  its  currency  that 
can  be  kept  in  circulation.  It  can  supply  about  the 
same  amount  of  loanable  capital,  even  though  its  cur- 
rency should  be  returned  for  redemption  immediately 
after  it  is  issued.  It  can  do  this,  because  the  banks, 
by  paying  interest  on  the  currency  returned  for  redemp- 
tion —  or,  what  is  the  same  thing,  by  paying  dividends 
on  the  PRODUCTIVE  STOCK  transferred  in  redemption  of 
the  currency  —  can  postpone  the  payment  of  specie  to 
such  time  as  it  shall  be  convenient  for  them  to  pay  it. 

All  that  would  be  necessary  to  make  loans  practica- 
ble on  this  basis,  would  be,  that  the  banks  should 
receive  a  higher  rate  of  interest  on  their  loans  than 
they  would  have  to  pay  on  the  currency  returned  for 


45 


redemption ;  that  is,  on   the  PRODUCTIVE  STOCK  trans- 
ferred in  redemption  of  the  currency. 

The  rate  of  interest  received  by  the  banks,  on  the 
loans  made  by  them,  would  need  to  be  so  much  higher 
than  that  paid  by  them,  on  currency  returned  for 
redemption,  as  to  make  it  an  object  for  them  to  loan 
more  of  their  currency  than  could  be  kept  in  circula- 
tion. Subject  to  this  condition,  the  banks  could  loan 
their  entire  capitals,  whether  much  or  little  of  it  could 
be  kept  in  circulation. 

For  example,  suppose  the  banks  should  pay  six  per 
cent,  interest  on  currency  returned  for  redemption  — 
(or  as  dividends  on  the  PRODUCTIVE  STOCK  transferred 
in  redemption  of  such  currency)  —  they  could  then 
loan  their  currency  at  nine  per  cent,  and  still  make 
three  per  cent,  profits,  even  though  the  currency  loaned 
should  come  back  for  redemption  immediately  after  it 
was  issued. 

But  this  is  not  all.  Even  though  the  banks  should 
pay,  on  currency  returned  for  redemption,  precisely 
the  same  rate  of  interest  they  received  on  loans  —  say 
six  per  cent.  —  they  could  still  do  business,  if  their 
currency  should,  on  an  average,  continue  in  circulation 
one  half  the  time  for  which  it  was  loaned;  for  then  the 
banks  would  get  three  per  cent,  net  on  their  loans,  and 
this  would  make  their  business  a  paying  one. 

But  the  banks  would  probably  do  much  better  than 

this ;    for   bank    credits    would    supersede    all   private 

credits;   and  the  diversity  and  amount  of  production 

would  be  so  great  that  an  immense  amount  of  currency 

6 


46 


would  be  constantly  required  to  make  the  necessary 
exchanges.  And  whatever  amount  should  be  necessary 
for  making  these  exchanges,  would,  of  course,  remain 
in  circulation.  However  much  currency,  therefore, 
should  be  issued,  it  is  probable  that,  on  an  average,  it 
would  remain  in  circulation  more  than  half  the  time  for 
which  it  was  loaned. 

Or  if  the  banks  should  pay  six  per  cent,  interest  on 
currency  returned  for  redemption  ;  and  should  then 
loan  money,  for  six  months,  at  eight  per  cent,  interest ; 
and  this  currency  should  remain  in  circulation  but  one 
month ;  the  banks  would  then  get  eight  per  cent,  for 
the  one  month,  and  two  per  cent,  net  for  the  other  five 
months  ;  which  would  be  equal  to  three  per  cent,  for 
the  whole  six  months.  Or  if  the  currency  should 
remain  in  circulation  two  months,  the  banks  would 
then  get  eight  per  cent,  for  the  two  months,  and  two 
per  cent,  net  for  the  other  four  months ;  which  would 
be  equal  to  four  per  cent,  for  the  whole  six  months. 
Or  if  the  currency  should  remain  in  circulation  three 
months,  the  banks  would  then  get  eight  per  cent,  for 
three  months,  and  two  per  cent,  net  for  the  other  three 
months  ;  which  would  be  equal  to  five  per  cent,  for  the 
whole  six  months.  Or  if  the  currency  should  remain 
in  circulation  four  months,  the  banks  would  then  get 
eight  per  cent,  for  the  four  months,  and  two  per  cent, 
net  for  the  other  two  months ;  which  would  be  equal  to 
six  per  cent,  for  the  whole  six  months.  Or  if  the  cur- 
rency should  remain  in  circulation  five  months,  the 
banks  would  then  get  eight  per  cent,  for  the  five 


47 


months,  and  two  per  cent,  net  for  the  other  month ; 
which  would  be  equal  to  seven  per  cent,  for  the  whole 
six  months. 

The  banks  would  soon  ascertain,  by  experiment, 
how  long  their  currency  was  likely  to  remain  in  circu- 
lation ;  and  what  rate  of  interest  it  was  therefore 
necessary  for  them  to  charge  to  make  their  business  a 
paying  one.  And  that  rate,  whatever  it  might  be,  the 
borrowers  would  have  to  pay.  Subject  to  this  condi- 
tion, the  banks  could  always  loan  their  entire  capitals. 


CHAPTER    VI. 

AMOUNT     OF     CURRENCY     NEEDED. 

It  is  of  no  use  to  say  that  we  do  not  need  so  much 
currency  as  the  proposed  system  would  supply  ; 
because,  first,  if  we  should  not  need  it,  we  shall  not 
use  it.  Every  dollar  of  paper  will  represent  specific 
property  that  can  he  delivered  on  demand  in  redemp- 
tion of  it,  and  that  will  have  the  same  market  value  as 
gold.  The  paper  dollar,  therefore,  will  have  the  same 
market  value  as  the  gold  dollar,  or  as  a  dollar's  worth 
of  any  other  property ;  and  no  one  will  part  with  it, 
unless  he  gets  in  exchange  for  it  something  that  will 
serve  his  particular  wants  hetter ;  and  no  one  will 
accept  it,  unless  it  will  serve  his  particular  wants  bet- 
ter than  the  thing  he  parts  with.  No  more  paper, 
therefore,  can  circulate,  than  is  wanted  for  the  pur- 
chase and  sale  of  commodities  at  their  true  and  natural 
values,  as  measured  by  gold. 

Secondly,  we  do  not  know  at  all  how  much  currency 
we  do  need.  That  is  something  that  can  be  deter- 
mined only  by  experiment.  We  know  that,  hereto- 
fore, whenever  currency  has  been  increased,  industry 
and  traffic  have  increased  to  a  corresponding  extent. 
And  they  would  unquestionably  increase  to  an  extent 
far  beyond  any  thing  the  world  has  ever  seen,  if  only 


49 


they  were  aided  and  permitted  by  an  adequate  cur- 
rency. 

We,  as  yet,  know  very  little  what  wealth  mankind 
are  capable  of  creating.  It  is  only  within  a  hundred 
years,  or  a  little  more,  that  any  considerable  portion  of 
them  have  really  begun  to  invent  machinery,  and 
learned  that  it  is  only  by  machinery  that  they  can 
create  any  considerable  wealth.  But  they  have  not 
yet  learned — at  least,  they  profess  not  to  have  learned 
—that  money  is  indispensable  to  the  practical  employ- 
ment of  machinery  ;  that  it  is  as  impossible  to  operate 
machinery  without  money,  as  it  is  to  operate  it  without 
wind,  water,  or  steam.  When  they  shall  have  learned, 
and  practically  accepted,  this  great  fact,  and  shall  have 
provided  themselves  with  money,  wealth  will  speedily 
become  universal.  And  it  is  only  those  who  would 
deplore  such  a  result,  or  those  who  are  too  stupid  to 
see  the  palpable  and  necessary  connection  between 
money  and  manufacturing  industry,  who  resist  the 
indefinite  increase  of  money. 

It  is  scarcely  a  more  patent  fact  that  land  is  the 
indispensable  capital  for  agricultural  industry,  than  it 
is  that  money  is  the  indispensable  capital  for  manufac- 
turing industry.  Practically,  everybody  recognizes 
this  fact,  and  virtually  acknowledges  it ;  although,  in 
words,  so  many  deny  it.  Men  as  deliberately  and 
accurately  calculate  the  amount  of  machinery  that  a 
hundred  dollars  in  money  will  operate,  as  they  do  the 
amount  of  machinery  that  a  ton  of  coal,  or  a  given 
amount  of  water,  will  operate.  They  calculate  much 


50 


more  accurately  the  amount  of  manufactured  goods  a 
hundred  dollars  will  produce,  than  they  do  the  amount 
of  grain,  grass,  or  vegetables  an  acre  of  land  will  pro- 
duce. They  no  more  expect  to  see  mechanics  carrying 
on  business  for  themselves  without  money,  than  they 
do  to  see  agricultural  laborers  carrying  on  farming 
without  land,  or  than  they  do  to  see  sailors  going  to 
sea  without  ships.  They  know  that  all  mechanical,  as 
well  as  agricultural,  laborers,  who  have  not  the  appro- 
priate capital  for  their  special  business,  must  neces- 
sarily stand  idle,  or  become  mere  w^age-laborers  for 
others,  at  such  particular  employments  as  the  latter 
may  dictate,  and  at  such  prices  as  the  latter  may  see 
fit  to  pay. 

All  these  things  attest  the  perfect  knowledge  that 
men  have,  that  a  money  capital  is  indispensable  to 
manufacturing  industry ;  whatever  assertions  they  may 
make  to  the  contrary. 

They  know,  therefore,  that  prohibitions  upon  money 
are  prohibitions  upon  industry  itself;  that  there  can 
be  no  such  thing  as  freedom  of  industry,  where  there 
is  not  freedom  to  lend  and  hire  capital  for  such 
industry. 

Every  one  knows,  too  —  who  knows  any  thing  at  all 
on  such  a  subject  —  that  it  is,  intrinsically,  as  flagrant 
a  tyranny,  as  flagrant  a  violation  of  men's  natural 
rights,  for  a  government  to  forbid  the  lending  and  hir- 
ing of  money  for  manufacturing  industry,  as  it  is  to 
forbid  the  lending  and  hiring  of  land,  or  agricultural 
implements,  for  agricultural  industry,  or  the  lending 


51 


and  hiring  of  ships  for  maritime  industry.  They  know 
that  it  is  as  flagrant  a  tyranny,  as  flagrant  a  violation  of 
men's  natural  rights,  to  forbid  one  man  to  lend  another 
money  for  mechanical  industry,  as  it  would  be  to  for- 
bid the  former  to  lend  the  latter  a  house  to  live  in,  a 
shop  to  work  in,  or  tools  to  work  with. 

It  is,  therefore,  a  flagrant,  manifest  tyranny,  a  fla- 
grant, manifest  violation  of  men's  natural  rights,  to 
lay  any  conditions  or  restrictions  whatever  upon  the 
business  of  banking  —  that  is,  upon  the  lending  and 
hiring  of  money  —  except  such  as  are  laid  upon  all 
other  transactions  between  man  and  man,  viz.  :  the 
fulfilment  of  contracts,  and  restraints  upon  force  and 
fraud. 

A  man  who  is  without  capital,  and  who,  by  prohibi- 
tions upon  banking,  is  practically  forbidden  to  hire 
any,  is  in  a  condition  elevated  but  one  degree  above  that 
of  a  chattel  slave.  He  may  live  ;  but  he  can  live  only  as 
the  servant  of  others ;  compelled  to  perform  such  labor, 
and  to  perform  it  at  such  prices,  as  they  may  see  fit  to 
dictate.  And  a  government,  which,  at  this  day,  sub- 
jects the  great  body  of  the  people  —  or  even  any  por- 
tion of  them  —  to  this  condition,  is  as  fit  an  object  of 
popular  retribution  as  any  tyranny  that  ever  existed. 

To  deprive  mankind  of  their  natural  right  and  power 
of  creating  wealth  for  themselves,  is  as  great  a  tyranny 
as  it  is  to  rob  them  of  it  after  they  have  created  it. 
And  this  is  done  by  all  laws  against  honest  banking. 

All  these  things  are  so  self-evident,  so  universally 
known,  that  no  man,  of  ordinary  mental  capacity,  can 


52 


claim  to  be  ignorant  of  them.  And  any  legislator, 
who  disregards  them,  should  be  taught,  by  a  discipline 
short,  sharp,  and  decisive,  that  his  power  is  wholly 
subordinate  to  the  natural  rights  of  mankind. 

It  is,  then,  one  of  man's  indisputable,  natural  rights 
to  lend  and  hire  capital  in  any  and  every  form  and 
manner  that  is  intrinsically  honest.  Arid  as  money,  or 
currency,  is  the  great,  the  indispensable  instrumentality 
in  the  production  and  distribution  of  wealth ;  as  it  is 
the  capital,  the  motive  power,  that  sets  all  other  instru- 
mentalities in  motion;  as  it  is  the  one  thing,  without 
which  all  the  other  great  agencies  of  production — such 
as  science,  skill,  and  machinery  —  are  practically  par- 
alyzed ;  to  say  that  we  need  no  more  of  it,  and  shall 
have  no  more  of  it,  than  we  now  have,  is  to  say  that 
we  need  no  more  wealth,  and  shall  have  no  more 
wealth,  and  no  more  equal  or  equitable  distribution  of 
wealth,  than  we  now  have.  It  is  to  say  that  the  mass 
of  mankind  —  the  laborers,  the  producers  of  wealth  - 
need  not  to  produce,  and  shall  not  be  permitted  to  pro- 
duce, wealth  for  themselves,  but  only  for  others. 

For  a  government  to  limit  the  currency  of  a  people, 
and  to  designate  the  individuals  (or  corporations)  who 
shall  have  the  control  of  that  currency,  is,  manifestly, 
equivalent  to  saying  there  shall  be  but  so  much  indus- 
try and  wealth  in  the  nation,  and  that  these  shall  be 
under  the  special  control,  and  for  the  special  enjoy- 
ment, of  the  individuals  designated ;  and,  of  course, 
that  all  other  persons  shall  be  simply  their  dependants 
and  servants  ;  receiving  only  such  prices  for  their  prop- 


53 


erty,  and  such  compensation  for  their  labor,  as  these 
few  holders  of  the  currency  shall  see  fit  to  give  for 
them. 

The  effect  of  these  prohibitions  upon  money,  and 
consequently  upon  industry,  are  everywhere  apparent 
in  the  poverty  of  the  great  body  of  the  people. 

At  the  present  time,  the  people  of  this  country  cer- 
tainly do  not  produce  one  third,  very  likely  not  one 
fifth,  of  the  wealth  they  might  produce.  And  the 
little  they  do  produce  is  all  in  the  hands  of  a  few. 
All  this  is  attributable  to  the  want  of  currency  and 
credit,  and  to  the  consequent  want  of  science,  skill, 
machinery,  and  working  capital. 

Of  the  twenty  million  persons,  male  and  female,  of 
sixteen  years  of  age  and  upwards  —  capable  of  pro- 
ducing wealth  —  certainly  not  one  in  five  has  the 
science,  skill,  implements,  machinery,  and  capital  neces- 
sary to  make  his  or  her  industry  most  effective ;  or  to 
secure  to  himself  or  herself  the  greatest  share  in  the 
products  of  his  or  her  own  industry.  A  very  large 
proportion  of  these  persons  —  nearly  all  the  females, 
and  a  great  majority  of  the  males  —  persons  capable 
of  running  machinery,  and  of  producing  each  three, 
five,  or  ten  dollars  of  wealth  per  day,  are  now  without 
science,  skill,  machinery,  or  capital,  and  are  either  pro- 
ducing nothing,  or  working  only  with  such  inferior 
means,  and  at  such  inferior  employments,  as  to  make 
their  industry  of  scarcely  any  value  at  all,  either  to 
themselves  or  others,  beyond  the  provision  of  the 
coarsest  necessaries  of  a  hard  and  coarse  existence. 
7 


54 


And  this  is  all  owing  to  the  ]ack  of  money;  or  rather 
to  the  lack  of  money  and  credit. 

There  are,  doubtless,  in  the  country,  ten  million 
(10,000,000)  persons,  male  and  female  —  sixteen  years 
of  age  and  upwards  —  who  are  naturally  capable  of 
creating  from  three  to  five  dollars  of  wealth  per  day, 
if  they  had  the  science,  skill,  machinery,  and  capital 
which  they  ought  to  have,  and  might  have ;  but  who, 
from  the  want  of  these,  are  now  creating  not  more 
than  one  dollar  each  per  day,  on  an  average ;  thus 
occasioning  a  loss  ,to  themselves  and  the  country  of 
from  twenty  to  forty  millions  of  dollars  per  day,  for 
three  hundred  days  in  a  year ;  a  sum  equal  to  from  six 
to  twelve  thousand  millions  per  annum ;  or  three  to 
six  times  the  amount  of  our  entire  national  debt. 

And  there  are  another  ten  million  of  persons  —  bet- 
ter supplied,  indeed,  with  capital,  machinery,  &c.,  than 
the  ten  million  before  mentioned  —  but  who,  neverthe- 
less, from  the  same  causes,  are  producing  far  less  than 
they  might. 

The  aggregate  loss  to  the  country,  from  these 
causes,  is,  doubtless,  equal  to  from  ten  to  fifteen  thou- 
sand millions  per  year ;  or  five,  six,  or  seven  times  the 
amount  of  the  entire  national  debt. 

In  this  estimate  no  account  is  taken  of  the  loss  suf- 
fered from  our  inability  —  owing  simply  to  a  want  of 
money  —  to  bring  to  this  country,  and  give  employ- 
ment to,  the  millions  of  laborers,  in  Europe  and  Asia, 
who  desire  to  come  here,  and  add  the  products  of  their 
labor  to  our  national  wealth. 


55 


It  is,  probably,  no  more  than  a  reasonable  estimate 
to  suppose  that  the  nation,  as  a  nation,  is  losing  twen- 
ty thousand  millions  of  dollars  ($20,000,000,000)  per 
annum  —  about  ten  times  the  amount  of  our  national 
debt  —  solely  for  the  want  of  money  to  give  such  em- 
ployment as  they  need,  to  the  population  we  now  have, 
and  to  those  who  desire  to  come  here  from  other 
countries. 

Among  the  losses  we  suffer,  from  the  causes  men- 
tioned, the  non- production  of  new  inventions  is  by  no 
means  the  least.  As  a  general  rule,  new  inventions 
are  made  only  where  money  and  machinery  prevail. 
And  they  are  generally  produced  in  a  ratio  correspond- 
ing with  the  amount  of  money  and  machinery.  In  no 
part  of  the  country  are  the  new  inventions  equal  in 
number  to  what  they  ought  to  be,  and  might  be.  In 
three  fourths  of  the  country  very  few  are  produced. 
In  some,  almost  none  at  all.  The  losses  from  this 
cause  cannot  be  estimated  in  money. 

The  government,  in  its  ignorance,  arrogance,  and 
tyranny,  either  does  not  see  all  this,  or,  seeing  it,  does 
not  regard  it.  While  these  thousands  of  millions  are 
being  lost  annually,  from  the  suppression  of  money, 
and  consequently  of  industry,  and  while  three  fourths 
of  the  laborers  of  the  country  are  either  standing  idle, 
or,  for  the  want  of  capital,  are  producing  only  a  -mere 
fraction  of  what  they  might  produce,  a  two-pence- 
ha'-penny  Secretary  of  the  Treasury  can  find  no  better 
employment  for  his  faculties,  than  in  trying,  first,  to 
reduce  the  rate  of  interest  on  the  public  debt  one  per 


56 


cent. — thereby  saving  twenty  millions  a  year,  or  fifty 
cents  for  each  person,  on  an  average !  And,  secondly, 
in  paying  one  hundred  millions  per  annum  of  the  prin- 
cipal ;  that  is,  two  and  a  half  dollars  for  each  person, 
on  an  average  !  And  he  insists  that  the  only  way  to 
achieve  these  astounding  results,  is  to  deprive  the  peo- 
ple at  large  of  money !  To  destroy,  as  far  as  possible, 
their  industry !  To  deprive  them,  as  far  as  possible,  of 
all  power  to  manufacture  for  themselves !  And  to  com- 
pel them  to  pay,  to  the  few  manufacturers  it  has  under 
its  protection,  fifty  or  one  hundred  per  cent,  more  for 
their  manufactures  than  they  are  worth! 

He  has  been  tugging  at  this  tremendous  task  four 
years,  or  thereabouts.  And  he  confidently  believes 
that  if  he  can  be  permitted  to  enforce  this  plan  for  a 
sufficient  period  of  years,  in  the  future,  he  will  ulti- 
mately be  able  to  save  the  people,  annually,  fifty  cents 
each,  on  an  average,  in  interest !  and  also  continue  to 
pay,  annually,  two  dollars  and  a  half  for  each  person, 
on  an  average,  of  the  principal,  of  the  national  debt ! 

He  apparently  does  not  know,  or,  if  he  knows,  it  is, 
in  his  eyes,  a  matter  of  comparatively  small  moment, 
that  this  saving  of  $20,000,000  per  annum  in  interest, 
and  this  payment  of  $100,000,000  per  annum  of  prin- 
cipal, which  he  proposes  to  make  on  behalf  of  the 
people,  are  not  equal  to  what  two  days  —  or  perhaps 
even  one  day  —  of  their  industry  would  amount  to,  if 
they  were  permitted  to  enjoy  their  natural  rights  of 
lending  and  hiring  capital,  and  producing  such  wealth 
as  they  please  for  themselves. 


57 


He  apparently  does  not  know,  or,  if  he  knows,  it  is 
with  him  a  small  matter,  that  if  the  people  were  per- 
mitted to  enjoy  their  natural  freedom  in  currency  and 
credit,  and  consequently  their  natural  freedom  in  indus- 
try, they  could  pay  the  entire  national  debt  three, 
four,  or  a  half  dozen  times  over  every  year,  more  easily 
than  they  can  save  the  $20,000,000,  and  pay  the 
$100,000,000,  annually,  by  the  process  that  he  adopts 
for  saving  and  paying  them. 

And  yet  this  man,  and  his  policy,  represent  the  gov- 
ernment and  its  policy.  The  president  keeps  him  in 
office,  and  Congress  sustain  him  in  his  measures,. 

In  short,  the  government  not  only  does  not  offer,  but 
is  apparently  determined  not  to  suffer,  any  such  thing 
as  freedom  in  currency  and  credit,  or,  consequently,  in 
industry.  It  is,  apparently,  so  bent  upon  compelling 
the  people  to  give  more  for  its  few  irredeemable  notes 
than  they  are  worth ;  and  so  bent  upon  keeping  all 
wealth,  and  all  means  of  wealth,  in  the  hands  of  the 
few  —  upon  whose  money  and  frauds  it  relies  for  sup- 
port—  that  it  is  determined,  if  possible,  to  perpetuate 
this  state  of  things  indefinitely.  And  it  will  probably 
succeed  in  perpetuating  it  indefinitely — under  cover 
of  such  false  pretences  as  those  of  specie  payments, 
inflation  of  prices,  reducing  the  interest,  and  paying  the 
principal,  of  the  national  debt,  &c. — unless  the  people 
at  large  shall  open  their  eyes  to  the  deceit  and  robbery 
that  are  practised  upon  them ;  and,  by  establishing 


58 


freedom  in  currency  and  credit  —  and  thereby  freedom 
in  industry  and  commerce  —  end  at  once  and  forever 
the  tyranny  that  impoverishes  and  enslaves  them. 


CHAPTER    VII. 

IMPORTANCE     OF    THE     SYSTEM    TO 
MASSACHUSETTS. 

SECTION  1. 

The  tariffs,  by  means  of  which  a  few  monied  men 
of  Massachusetts  have  so  long  plundered  the  rest  of 
the  country,  and  on  which  they  have  so  largely  relied 
for  their  prosperity,  will  not  much  longer  be  endured. 
The  nation  at  large  has  no  need  of  tariffs.  Money  is 
the  great  instrumentality  for  manufacturing.  And  the 
nation  needs  nothing  but  an  ample  supply  of  money 
—  in  addition  to  its  natural  advantages  —  to  enable 
our  people  to  manufacture  for  themselves  much  more 
cheaply  than  any  other  people  can  manufacture  for  us. 

To  say  nothing  of  the  many  millions  who,  if  we  had 
the  money  necessary  to  give  them  employment,  might 
be  brought  here  from  Europe  and  Asia,  and  employed 
in  manufactures,  more  than  half  the  productive  power 
of  our  present  population  —  in  the  South  and  West 
much  more  than  half — is  utterly  lost  for  the  want  of 
money,  and  the  consequent  want  of  science,  skill,  and 
machinery.  And  yet  those  few,  who  monopolize  the 
present  stock  of  money,  insist  that  they  must  have 
tariffs  to  enable  them  to  manufacture  at  all.  And  the 
nation  is  duped  by  these  false  pretences. 


60 


To  give  bounties  to  encourage  manufactures,  and  at 
the  same  time  forbid  all  but  a  favored  few  to  have 
money  to  manufacture  with,  is  just  as  absurd  as  it 
would  be  to  give  bounties  to  encourage  manufactures, 
and  at  the  same  time  forbid  all  but  a  favored  few  to 
have  machinery  of  any  kind  to  manufacture  with.  It 
is  just  as  absurd  as  it  would  be  to  give  bounties  to 
encourage  agriculture,  and  at  the  same  time  forbid  all 
but  a  favored  few  to  own  land,  or  have  cattle,  horses, 
seed  corn,  seed  wheat,  or  agricultural  implements.  It 
is  just  as  absurd  as  it  would  be  to  give  bounties  to 
encourage  navigation,  and  at  the  same  time  forbid  all 
but  a  favored  few  to  have  ships. 

The  whole  object  of  such  absurdities  and  tyrannies 
is  to  commit  the  double  wrong  of  depriving  the  mass 
of  the  people  of  all  power  to  manufacture  for  them- 
selves, and  at  the  same  time  compel  them  to  pay  extor- 
tionate prices  to  the  favored  few  who  are  permitted  to 
manufacture. 

When  tariffs  shall  be  abolished,  Massachusetts  will 
have  no  means  of  increasing  her  prosperity,  nor  even 
of  perpetuating  such  poor  prosperity  as  she  now  has,* 
except  by  a  great  increase  of  money ;  such  an  increase 
of  money  as  will  enable  her  skilled  laborers  and  enter- 
prising young  men  to  get  capital  for  such  industries 
and  enterprises  as  they  may  prefer  to  engage  in  here, 
rather  than  go  elsewhere. 

Even  if  Massachusetts  were  willing  to  manufacture 

I  say  "poor  prosperity,"  because  the  present  prosperity  of  Massachusetts  is 
only  a  disho 
not  of  the  many. 


not  only  a  dishonest  prosperity,  but  is  also  only  the  prosperity  of  the  few,  and 
of  the 


61 


for  the  South  and  West,  without  a  tariff,  she  could 
hope  to  do  so  only  until  the  South  and  West  should 
supply  themselves  with  money.  So  soon  as  they  shall 
supply  themselves  with  money,  they  will  be  able  to 
manufacture  for  themselves  more  cheaply  than  Massa- 
chusetts can  manufacture  for  them.  Their  natural 
advantages  for  manufacturing  are  greatly  superior  to 
those  of  Massachusetts.  They  have  the  cheap  food, 
coal,  iron,  lead,  copper,  wool,  cotton,  hides,  &c.,  &c. 
They  lack  only  money  to  avail  themselves  of  these 
advantages.  And,  under  the  system  proposed,  their 
lands  and  railroads  are  capable  of  supplying  all  the 
money  they  need.  And  they  will  soon  adopt  that,  or 
some  other  system.  And  they  will  then  not  only  be 
independent  of  Massachusetts,  but  will  be  able  to  draw 
away  from  her  her  skilled  laborers,  and  enterprising 
young  men,  unless  she  shall  first  supply  them  with  the 
money  capital  necessary  for  such  industries  and  enter- 
prises as  may  induce  them  to  remain.  They  will,  of 
course,  go  where  they  can  get  capital,  instead  of  stay- 
ing where  they  can  get  none. 

So  great  are  the  natural  advantages  of  the  South 
and  West  over  those  of  Massachusetts,  that  it  is  doubt- 
ful how  many  of  these  men  can  be  persuaded  to 
remain,  by  all  the  inducements  that  capital  can  offer. 
But  without  such  inducements  it  is  certain  they  will 
all  go. 

And  Massachusetts  has  no  means  of  supplying  this 
needed  money,  except  by  using  her  real  estate  as 
banking  capital. 

8 


62 


It  is,  therefore,  plainly  a  matter  of  life  or  death  to 
the  holders  of  real  estate  in  Massachusetts  to  use  it  for 
that  purpose  ;  for  their  real  estate  will  he  worth  noth- 
ing when  the  skilled  labor  and  the  enterprising  young 
men  of  Massachusetts  shall  have  deserted  her. 

All  this  is  so  manifest  as  to  need  no  further  demon- 
stration. And  Massachusetts  will  do  well  to  look  the 
facts  in  the  face  before  it  is  too  late. 

SECTION  2. 

What  prospect  has  Massachusetts  under  the  present 
"National"  system? 

The  Comptroller  of  the  Currency,  in  his  last  annual 
report,  says,  that  of  the  $354,000,000  of  circulation 
authorized  bylaw,  Massachusetts  has  now  $58,506,686. 
He  says,  further,  that  this  is  more  than  four  times  as 
much  as  she  would  be  entitled  to,  if  the  currency  were 
apportioned  equally  among  the  States,  according  to 
population ;  more  than  twice  as  much  as  she  would  be 
entitled  to,  if  the  circulation  were  apportioned  among 
the  States,  according  to  their  wealth ;  and  three  times 
as  much  as  she  is  entitled  to  upon  an  apportionment 
niade —  as  apportionments  are  now  professedly  made  — 
half  upon  population,  and  half  upon  wealth. 

The  Comptroller  further  says,  that  a  law  of  Congress, 
passed  July  12,  1870,  requiring  him  to  withdraw  circu- 
lation from  those  States  having  more  than  their  just 
proportion,  and  to  distribute  it  among  those  now  hav- 
ing less  than  their  just  proportion,  will  require  him  to 


withdraw  "  from  thirty-six  banks  in  the  City  of  Boston, 
$11,403,000;  [and]  from  fifty-three  country  banks  of 
Massachusetts,  $2,997,000." 

Thus  the  law  requires  $14,400,000  to  be  withdrawn 
from  the  present  banks  of  Massachusetts. 

When  this  shall  have  been  done,  she  will  have  but 
$44,106,686  left.  And  as  this  will  be  more  than  three 
times  her  just  proportion  on  a  basis  of  population,  and 
nearly  twice  her  just  share  on  a  basis  of  wealth,  there 
is  no  knowing  how  soon  the  remaining  excess  over  her 
just  share  may  be  withdrawn.* 

By  the  census  of  1870,  Massachusetts  had  a  popula- 
tion of  1,457,351.  She  has  now,  doubtless,  a  popula- 
tion of  1,500,000.  Calling  her  population  1,500,000, 
the  $58,506,686  of  circulation  which  she  now  has,  is 
equal  to  $39  for  each  person,  on  an  average.  When 
$14,400,000  of  this  amount  shall  have  been  withdrawn, 
as  the  law  now  requires  it  to  be,  the  circulation  will  be 
reduced  to  less  than  $30  for  each  person,  on  an  aver- 
age. If  the  circulation  should  be  reduced  to  the  pro- 
portion to  which  Massachusetts  is  entitled,  on  the  basis 
of-  wealth  — that  is,  to  $25,098,600  — she  will  then 
have  less  than  $17  for  each  person,  on  an  average. 
If  the  circulation  should  be  reduced  to  the  proportion 
to  which  Massachusetts  is  entitled  on  a  basis  of  popula- 
tion—  that  is  to  $13,879,778  —  she  will  then  have  a 
trifle  less  than  $9  for  each  person,  on  an  average. 

For  years  the  industry  of  Massachusetts  has  been 

*  If  the  excess  mentioned  in  the  text  should  not  be  withdrawn,  it  will  be  only 
because  the  system  is  so  villainous  in  itself,  that  other  parts  of  the  country  will 
not  accept  the  shares  to  which  they  are  entitled. 


64 


greatly  crippled  for  the  want  of  bank  credits,  although 
her  banks  have  been  authorized  to  issue  their  notes  to 
the  amount  of  $58,506,686 ;  or  $39  to  each  person,  on 
an  average.  What  will  her  industry  be  when  her 
banks  shall  be  authorized  to  issue  only  $44,106,686,  or 
$30  for  each  person,  on  an  average  ?  What  will  it  be, 
if  her  bank  issues  shall  be  reduced  to  her  proportion  on 
a  basis  of  wealth,  to  wit,  $25,098,600;  or  less  than 
$17  for  each  person,  on  an  average  ?  Or  what  will  it 
be,  if  her  bank  circulation  shall  be  reduced  to  her  pro- 
portion on  a  basis  of  population,  to  wit,  to  $13,379,778; 
or  less  than  $9  for  each  person,  on  an  average  ? 

In  contrast  with  such  contemptible  sums  as  these, 
Massachusetts,  under  the  system  proposed,  could  have 
nine  hundred  millions  ($900,000,000)  of  bank  loans;* 
that  is,  $600  for  every  man,  woman,  and  child,  on  an 
average ;  or  $1,500  to  each  adult,  male  and  female,  on 
an  average ;  or  $3,000  to  each  male  adult,  on  an 
average. 

Which,  now,  of  these  two  systems  is  most  likely  to 
secure  and  increase  the  prosperity  of  Massachusetts  ? 
Which  is  most  likely  to  give  to  every  deserving  man 
and  woman  in  the  State,  the  capital  necessary  to  make 
their  industry  most  productive  to  themselves  individu- 
ally, and  to  the  State  ?  Which  system  is  most  likely 
to  induce  the  skilled  laborers  and  enterprising  young 
men  of  Massachusetts  to  remain  here  ?  And  which  is 
most  likely  to  drive  them  away  ? 

*  Since  the  notes  on  page  fifth  were  printed,  the  Boston  Journal,  of  Jan.  11, 
1873,  says  that,  by  the  valuation  of  1872,  the  real  estate  of  Massachusetts  is 
$1,131,306,347. 


65 
SECTION  3. 

But  the  whole  is  not  yet  told.  The  present  "  Na- 
tional" system  is  so  burdened  with  taxes  and  other 
onerous  conditions,  that  no  banking  at  all  can  be  done 
under  it,  except  at  rates  of  interest  that  are  two  or 
three  times  as  high  as  they  ought  to  be ;  or  as  they 
would  be  under  the  system  proposed. 

The  burdens  imposed  on  the  present  banks  are  prob- 
ably equal  to  from  six  to  eight  per  cent,  upon  the 
amount  of  their  own  notes  that  they  are  permitted  to 
issue. 

In  the  first  place,  they  are  required,  for  every  $90 
of  circulation,  to  invest  $100  in  five  or  six  per  cent, 
government  bonds.*  This  alone  is  a  great  burden  to 
all  that  class  of  persons  who  want  their  capital  for 
active  business.  It  amounts  to  actual  prohibition  upon 
all  whose  property  is  in  real  estate,  and  therefore  not 
convertible  into  bonds.  And  this  is  a  purely  tyranni- 
cal provision,  inasmuch  as  real  estate  is  a  much  safer 
and  better  capital  than  the  bonds.  Let  us  call  this  a 
burden  of  two  per  cent,  on  their  circulation. 

Next,  is  the  risk  as  to  the  permanent  value  of  the 
bonds.  Any  war,  civil  or  foreign,  would  cause  them  to 

*  At  first  they  were  required  to  invest  only  in  six  per  cent,  bonds.  But  more 
recently  they  have  been  coerced  or  "  persuaded  "  to  invest  sixty-five  millions 
($65,000,000)  in  Jive  per  cent,  bonds.  And  very  lately  it  has  been  announced 
that  "  The  Comptroller  of  the  Currency  will  not  hereafter  change  United  States 
bonds,  deposited  as  security  for  circulating  notes  of  national  banks,  except  upon 
condition  of  substituting  the  new  five  per  cents,  of  the  loan  of  July  14,  1870,  and 
January  20,  1872."  —  Boston  Daily  Advertiser  of  February  5,  1873. 

From  this  it  is  evident  that  all  the  banks  are  to  be  "  persuaded  "  into  investing 
their  capitals  in  Jive  per  cent,  bonds. 


drop  in  value,  as  the  frost  causes  the  mercury  to  drop 
in  the  thermometer.  Even  any  danger  of  war  would 
at  once  reduce  them  in  value.  Let  us  call  this  risk 
another  burden  of  one  per  cent,  on  the  circulation. 

Next,  every  bank  in  seventeen  or  eighteen  of  the 
largest  cities  —  Boston  among  the  number  —  are  re- 
quired to  keep  on  hand,  at  all  times,  a  reserve  —  in 
dead  capital  (legal  tenders)  —  "  equal  to  at  least  twen- 
ty-five per  centum,"  and  all  other  banks  a  similar 
reserve  "  equal  to  at  least  fifteen  per  centum,"  "  of  the 
aggregate  amount  of  their  notes  in  circulation,  and  of 
their  deposits." 

Doubtless,  two  thirds  —  very  likely  three  fourths  — 
of  all  the  bank  circulation  and  deposits  are  in  the 
seventeen  cities  named.  And  as  these  city  banks  are 
required  to  keep  a  reserve  of  dead  capital  equal  to 
twenty-five  per  cent.,  and  all  others  a  similar  reserve 
equal  to  fifteen  per  cent.,  both  on  their  circulation  and 
deposits,  this  average  burden  on  all  the  banks  is, 
doubtless,  equal  to  two  per  cent,  on  their  circulation. 

Next,  the  banks  are  required  to  pay  to  the  United 
States  an  annual  tax  of  one  per  cent,  on  their  average 
circulation,  and  half  of  one  per  cent,  on  the  amount  of 
their  deposits. 

Here  is  another  burden  equal  to  at  least  one  and  a 
half  per  cent,  on  their  circulation. 

Then  the  capitals  of  the  banks  —  the  United  States 
bonds  —  are  made  liable  to  State  taxes  to  any  extent, 
"  not  at  a  greater  rate  than  is  assessed  upon  the  men- 
led  capital  in  the  hands  of  individual  citizens  of  such 


67 


State."  This  tax  is  probably  equal  to  one  per  cent,  on 
their  circulation. 

Here,  then,  are  taxes  and  burdens  equal  to  seven  and 
a  half  per  cent,  on  their  circulation. 

Next,  the  banks  are  required  to  make  at  least  five 
reports  annually,  to  the  Comptroller  of  the  Currency, 
of  their  "  resources  and  liabilities."  Also  reports  of 
"  the  amount  of  each  dividend  declared  by  the  associa- 
tion." 

Then,  too,  the  banks  are  restricted  as  to  the  rates  of 
interest  they  are  permitted  to  take. 

Then  "  Congress  may  at  any  time  alter,  amend,  or 
repeal  this  act;  "  and  thus  impose  upon  the  banks  still 
further  taxes,  conditions,  restrictions,  returns,  and 
reports.  Or  it  may  at  pleasure  abolish  the  banks 
altogether. 

All  these  taxes,  burdens,  and  liabilities,  cannot  be 
reckoned  at  less  than  eight  or  nine  per  cent,  on  the  cir- 
culation of  the  banks ;  a  sum  two  or  three  times  as 
great  as  the  rate  of  interest  ought  to  be  ;  and  two  or 
three  times  as  great  as  it  would  be  under  the  system 
proposed. 

And  yet  the  banks  must  submit  to  all  these  burdens 
as  a  condition  of  being  permitted  to  loan  money  at  all. 
And  they  must  make  up  —  in  their  rates  of  interest  — 
for  all  these  burdens.  Under  this  system,  therefore, 
the  rate  of  interest  must  always  be  two  or  three  times 
as  high  as  it  ought  to  be. 

The  objections  to  the  system,  then,  are,  first,  that  it 
furnishes  very  little  loanable  capital ;  and,  second,  that 


68 


it  necessarily  raises  the  interest  on  that  little  to  two  or 
three  times  what  it  ought  to  be. 

Such  a  system,  obviously,  could  not  be  endured  at 
all,  but  for  these  reasons,  viz.  :  first,  that,  being  a 
monopoly,  those  holding  it  are  enabled  to  make  enor- 
mous extortions  upon  borrowers ;  and,  secondly,  that 
these  borrowers  —  most  of  whom  are  the  bankers 
themselves  —  employ  the  money  in  the  manufacture 
and  sale  of  goods  that  are  protected,,  by  tariffs,  from 
foreign  competition,  and  for  which  they  are  thus  ena- 
bled to  get,  say,  fifty  per  cent,  more  than  they  are 
\vorth. 

In  this  way,  these  bank  extortions  and  tariff  extor- 
tions are  thrown  ultimately  upon  the  people  who  con- 
sume the  goods  which  the  bank  capital  is  employed  in 
producing  and  selling. 

Thus  the  joint  effect  of  the  bank  system  and  the 
tariff  is,  first,  to  deprive  the  mass  of  the  people  of  the 
money  capital  that  would  enable  them  to  manufacture 
for  themselves ;  and,  secondly,  to  compel  them  to  pay 
extortionate  prices  for  the  few  manufactures  that  are 
produced. 

Under  the  system  proposed,  all  these  things  would 
be  done  away.  The  West  and  the  South,  that  are  now 
relied  on  to  pay  all  these  extortions,  would  manufac- 
ture for  themselves.  Their  lands  and  railroads  would 
enable  them  to  supply  all  the  manufacturing  capital 
that  could  be  used.  And  they  could  supply  it  at  one 
half,  or  one  third,  the  rates  now  required  by  the  "  Na- 
tional" banks.  Of  course,  Massachusetts  could  not  — 


69 


under  the  "National"  system  —  manufacture  a  dollar's 
worth  for  the  South  and  West.  She  could  not  keep 
her  manufacturing  laborers.  They  would  all  go  where 
they  could  get  cheap  capital,  cheap  supplies,  and  good 
markets.  And  then  the  manufacturing  industry  of 
Massachusetts,  and  with  it  the  value  of  her  real  estate, 
will  have  perished  from  the  natural  and  legitimate 
effect  of  her  meanness,  extortion,  and  tyranny. 

Looking  to  the  future,  then,  there  is  no  State  in  the 
Union  —  certainly  none  outside  of  New  England  — 
that  has  a  greater  interest  in  supplying  her  mechanics 
with  the  greatest  possible  amount  of  capital;  ,or  in 
supplying  it  at  the  lowest  possible  rates  of  interest. 
And  this  can  be  done  only  by  using  her  real  estate  as 
banking  capital. 


CHAPTER    VIII. 

THE     TRUE     CHARACTER     OF     THE 
"NATIONAL"     SYSTEM. 

SECTION  1. 

Under  the  "  National "  system  there  are  less  than 
2,000  banks.  But  let  us  call  them  2,000. 

Calling  the  population  of  the  country  forty  millions, 
there  is  but  one  bank  to  20,000  people. 

And  this  one  bank  is,  in  laiv,  a  person ;  and  only  a 
single  person.  In  lending  money,  it  acts,  and  can  act, 
only  as  a  unit.  Its  several  stockholders  cannot  act 
separately,  as  so  many  individuals,  in  lending  money. 

So  far,  therefore,  as  this  system  is  concerned,  there 
is  but  one  money  lender  for  twenty  thousand  people  f 

Of  these  20,000  people,  ten  thousand  (male  and 
female)  are  sixteen  years  of  age  and  upwards,  capable 
of  creating  wealth,  and  requiring  capital  to  make  their 
labor  most  productive. 

Yet,  so  far  as  this  system  is  concerned,  there  is  .but 
one  person  authorized  to  lend  money  to,  or  for,  these 
ten  thousand,  who  wish  to  borrow. 

And  this  one  money  lender  is  one  who,  proverbially 
"  has  no  soul."  It  is  not  a  natural  human  being.  It 
is  a  legal,  an  artificial,  and  not  a  natural,  person.  It  is 
neither  masculine  nor  feminine.  It  has  not  the  ordin- 


ary  human  sympathies,  and  is  not  influenced  by  the 
ordinary  human  motives  of  action.  It  is  no  father, 
who  might  wish  to  lend  money  to  his  children,  to  start 
them  in  life.  It  is  no  neighbor,  who  might  wish  to 
assist  his  neighbor.  It  is  no  citizen,  Avho  might  wish 
to  promote  the  public  welfare.  It  is  simply  a  nonde- 
script, created  by  law,  that  wants  money,  and  nothing 
else. 

Moreover,  it  has  only  $177,000  to  lend  to  these 
10,000  borrowers;  that  is,  a  fraction  less  than  $18,  on 
an  average,  for  each  one! 

What  chance  of  borrowing  capital  have  these  ten 
thousand  persons,  who  are  forbidden  to  borrow,  except 
from  this  one  soulless  person,  who  has  so  little  to  lend? 

If  money  lenders  must  be  soulless  —  as,  perhaps,  to 
some  extent,  they  must  be  —  it  is  certainly  of  the 
utmost  importance  that  there  be  so  many  of  them,  and 
that  they  may  have  so  much  money  to  lend,  as  that 
they  may  be  necessitated,  by  their  own  selfishness,  to 
compete  with  each  other,  and  thus  save  the  borrowers 
from  their  extortions. 

But  the  "  National "  system  says,  not  only  that  the 
money  lender  shall  be  a  soulless  person,  and  one  having 
only  a  little  money  to  lend,  but  that  he  shall  also  have 
the  whole  field — a  field  of  10,000  borrowers — entirely 
to  himself! 

It  says  that  this  soulless  person  shall  have  this  whole 
field  to  himself,  notwithstanding  he  has  so  little  money 
to  lend,  and  notwithstanding  there  are  many  other  per- 
sons standing  by,  having,  in  the  aggregate,  fifty  times 


72 


as  much  money  to  lend  as  he ;  and  desiring  to  lend  it 
at  one  half,  or  one  third,  the  rates  he  is  demanding,  and 
extorting  ! 

It  says,  too,  that  he  shall  have  this  whole  field 
to  himself,  notwithstanding  that  ninety-nine  one-huii- 
dredths  of  those  who  desire  to  borrow,  are  sent  away 
empty !  and  are  thereby  condemned  —  so  far  as  such  a 
system  can  condemn  them  —  to  inevitable  poverty ! 

SECTION  2. 

But  further.  Each  one  of  these  2,000  legal,  or  arti- 
ficial, persons,  who  alone  are  permitted  to  lend  money, 
is  made  up  of,  say,  fifty  actual,  or  natural,  persons,  to 
whom  alone,  it  is  well  known,  that  this  legal  person 
will  lend  it ! 

These  2,000  legal  persons,  then,  who  alone  are  per- 
mitted to  lend  money,  are  made  up  of  100,000  actual 
persons,  who  alone  are  to  borrow  it. 

These  100,000  actual  persons,  who  compose  the 
legal  persons,  do  not,  then,  become  bankers  because 
they  have  money  to  lend  to  others,  but  only  because 
they  themselves  want  to  borrow  ! 

Thus  when  the  system  says  that  they  alone  shall 
lend,  it  virtually  says  that  they  alone  shall  borrow ; 
because  it  is  well  known  that,  in  practice,  they  will 
lend  only  to  themselves. 

In  short,  it  says  that  only  these  100,000  men — or 
one  in  four  hundred  of  the  population  —  shall  have 
liberty  either  to  lend,  or  borrow,  capital !  Such  capital 


as  is  indispensable  to  every  producer  of  wealth,  if  he 
would  control  his  own  industry,  or  make  his  labor  most 
productive. 

Consequently,  it  says,  practically  —  so  far  as  it  is  in 
its  power  to  say  —  that  only  one  person  in  four  hun- 
dred of  the  population  shall  be  permitted  to  have  capi- 
tal; or,  consequently,  to  labor  directly  for  himself; 
and  that  all  the  rest  of  the  four  hundred  shall  be  com- 
pelled to  labor  for  this  one,  at  such  occupations,  and 
for  such  wages,  as  he  shall  see  fit  to  dictate. 

In  short,  the  system  says  —  as  far  as  it  can  say  — 
that  only  100,000  persons  —  only  one  person  in  four 
hundred  of  the  population  —  shall  be  suffered  to  have 
any  money  !  And,  consequently,  that  all  the  property 
and  labor  of  the  thirty-nine  million  nine  hundred  thou- 
sand (39,900,000)  persons  shall  be  under  the  practical, 
and  nearly  absolute,  control  of  these  100,000  persons ! 
It  says  that  thirty-nine  million  nine  hundred  thousand 
(39,900,000)  persons  shall  be  in  a  state  of  industrial 
and  commercial  servitude  (to  the  100,000),  elevated 
but  one  degree  above  that  of  chattel  slavery. 

And  this  scheme  is  substantially  carried  out  in  prac- 
tice. These  100,000  men  call  themselves  "the  busi- 
ness men"  of  the  country.  By  this  it  is  meant,  not 
that  they  are  the  producers  of  wealth,  but  only  that 
they  alone  handle  the  money !  Other  persons  are  per- 
mitted to  sell  only  to  them !  to  buy  only  of  them  !  to 
labor  only  for  them !  and  to  sell  to,  buy  of,  and  labor 
for,  them,  only  at  such  prices  as  these  100,000  shall 
dictate. 


74 


These  100,000  so  called  "  business  men"  not  only 
own  the  government,  but  they  are  the  government. 
Congress  is  made  up  of  them,  and  their  tools.  And 
they  hold  all  the  other  departments  of  the  government 
in  their  hands.  Their  sole  purpose  is  power  and  plun- 
der ;  and  they  suffer  no  constitutional  or  natural  l:iw 
to  stand  in  the  Avay  of  their  rapacity. 

How  many  times,  during  the  last  presidential  can- 
vass, were  we  told  that  "  the  business  men  "  of  the 
country  wished  things  to  remain  as  they  were  ?  Rav- 
ing gathered  all  power  into  their  own  hands,  having 
subjected  all  the  property  and  all  the  labor  of  the 
country  to  their  service  and  control,  who  can  wonder 
that  they  were  content  with  things  as  they  were  ? 
That  they  did  not  desire  any  change  ?  And  their 
money  and  their  frauds  being  omnipotent  in  carrying 
elections,  there  was  no  change. 

These  100,000  "business  men,"  having  secured  to 
themselves  the  control  of  all  bank  credits,  and  thereby 
the  control  of  all  business  depending  on  bank  loans ; 
having  also  obtained  control  of  the  government,  enact 
that  foreigners  shall  not  be  permitted  to  compete  with 
them,  by  selling  goods  in  our  markets,  except  under  a 
disadvantage  of  fifty  to  one  hundred  per  cent. 

And  this  is  the  industrial  and  financial  system  which 
the  "  National  "  bank  system  establishes  —  so  far  as  it 
can  establish  it.  And  this  is  the  scheme  by  means  of 
which  these  100,000  men  cripple,  and  more  than  half 
paralyze,  the  industry  of  forty  millions  of  people,  and 
secure  to  themselves  so  large  a  portion  of  the  proceeds 
of  such  industry  as  they  see  fit  to  permit. 


CHAPTER     IX. 

AM  ASA     WALKER'S     OPINION     OF     THE 
AUTHOR'S     SYSTEM. 

As  MR.  AMASA  WALKER  is  considered  the  highest 
authority  in  the  country,  in  opposition  to  all  paper 
currency  that  does  not  represent  gold  or  silver  actually 
on  hand,  it  will  not  be  impertinent  to  give  his  opinion 
of  the  system  now  proposed. 

He  reviewed  it  in  a  somewhat  elaborate  article, 
entitled  "  Modern  Alchemy"  published  in  the  Bank- 
ers Magazine  (N.  T.)  for  December,  1861. 

That  he  had  no  disposition  to  do  any  thing  but  con- 
demn the  system  to  the  best  of  his  ability,  may  be 
inferred  from  the  following  facts. 

After  describing  the  efforts  of  the  old  alchemists  to 
transmute  the  baser  metals  into  gold,  he  represents  all 
attempts  to  make  a  useful  paper  currency  as  attempts 
"  to  transmute  paper  into  gold."  He  says  that  the 
idea  that  paper  can  be  made  to  serve  the  purposes  of 
money  is  "  a  perfectly  cognate  idea'1  with  that  of  the 
old  alchemists,  that  the  baser  metals  can  be  transmuted 
into  gold.  (p.  407.) 

He  also  informs  us  that  — 

"  It  is  perfectly  impracticable  to  transmute  paper 
into  gold  to.  any  extent  or  degree  whatever,  and  that 
all  attempts  to  do  so  (beneficially  to  the  trade  and 


76 


commerce  of  the  world)  are  as  absurd  and  futile  as  the 
efforts  of  the  old  alchemists  to  change  the  baser  metals 
into  the  most  precious."  (p.  415). 

These  extracts  are  given  to  show  the  spirit  and 
principle  of  his  article,  and  the  kind  of  arguments  he 
employs  against  all  paper  that  represents  other  prop- 
erty than  coin ;  even  though  that  property  have  equal 
value  with  coin  in  the  market. 

Yet  he  says  :  — 

"  One  thing  we  cheerfully  accord  to  MR.  SPOONER'S 
system  —  it  is  an  honest  one.  Here  is  no  fraud,  no 
deception.  It  makes  no  promise  that  it  cannot  fulfil- 
It  does  not  profess  to  be  convertible  into  specie  [on 
demand].  It  is  the  best  transmutation  project  we 
hate  seen."  (p.  413). 

When  he  says  that  "  it  is  the  best  transmutation 
project  he  has  seen/'  the  context  shows  that  he  means 
to  say  that  it  comes  nearer  to  transmuting  paper  into 
gold,  than  any  other  system  he  has  seen. 

This  admission,  coming  from  so  violent  an  opponent 
of  paper  currency,  may  reasonably  be  set  down  as  the 
highest  commendation  that  he  could  be  expected  to 
pay  to  any  paper  system. 

He  also  says  :  — 

"  Many  schemes  of  the  same  kind  have,  at  different 
times,  been  presented  to  the  world ;  but  none  of  them 
have  been  more  complete  in  detail,  or  more  systemati- 
cally arranged,  than  that  of  MR.  SPOONER.  (p.  414). 

But  by  way  of  condemning  the  system  as  far  as  pos- 
sible, he  says :  — 


77 


"  MR.  SPOONER,  however,  can,  we  think,  make  no 
claim  to  originality,  so  far  as  the  general  principle  is 
concerned.  The  famous  bank  of  JOHN  LAW,  in  France, 
was  essentially  of  the  same  character."  (p.  413.) 

No,  it  was  not  essentially  of  the  same  character. 
One  difference  —  to  say  nothing  of  twenty  others  — 
between  the  two  systems  was  this  :  that  LAW'S  bank 
issued  notes  that  it  had  no  means  to  redeem ;  whereas 

MR.  WALKER  himself  admits  that    "  MR.  SPOONER'S  sys- 

j 

tern-makes  no  promises  that  it  cannot  fulfil"  That  is 
to  say,  it  purports  to  represent  nothing  except  what 
it  actually  represents,  viz. :  property  that  is  actually 
on  hand,  and  can  always  be  delivered,  on  demand,  in 
redemption  of  the  paper.  Is  not  this  difference  an 
"  essential  "  one  ?  If  MR.  WALKER  thinks  it  is  not,  he 
differs  "  essentially  "  from  the  rest  of  mankind.  What 
fault  was  ever  found  with  JOHN  LAW'S  bank,  except 
that  it  could  not  redeem  its  paper  ?  Will  MR.  WALKER 
inform  us  ? 


BROS.,  INC. 

Manufacturer* 

Syracuse,  N.  Y. 
Stockton,  Calif. 


YC  24*66 


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